HDFC Life IPO has Effectively been Put on Hold: HDFC chairman Deepak Parekh

HDFC Standard Life Insurance's deal with Max Financial Services has effectively killed the possibility of what would have been the first initial share sale by a private Life Insurance company in India, as the new merged entity will automatically find a place on the stock exchanges through the listed Max Financial. HDFC chairman Deepak Parekh said the IPO process, which began earlier this year, has "effectively been put on hold". 
 

"Our shareholders continue to be keen to get the shares listed but the merger will also get us automatically listed. As you know, we had started the process for the IPO appointed bankers. Now when we are working on this deal, that process will be put on hold," Parekh told reports at a press conference to announce that Max Financial and HDFC have agreed to explore a merger of their insurance businesses. 
 

In May, HDFC, India's largest mortgage lender, appointed four banks to manage the IPO of its life insurance joint venture, the first such capital market transaction in the industry after the government allowed foreign investors to own up to 49% insurance companies last year. Citigroup, JP Morgan, Morgan Stanley and Kotak Mahindra Capital were to manage the issue in which HDFC was looking to sell a 10% stake in the unit from the 61.63% it held, expecting to raise around Rs 3,000 crore. 

This was supposed to be one of the largest financial sector IPOs in recent times, with HDFC Life being the second-largest private sector insurer by new business at more than Rs 25,000 crore. Bankers said HDFC can still sell shares in the secondary market post listing, but the chances of an IPO are over. "At the end of the day, HDFC needed to sell shares. They can still do it after the listing on the secondary market," said S Subramanian, managing director at Axis Capital.