Max Financial surges over 18 per cent on merger talks with HDFC Life

HDFC Life and Max life the two leading insurance providers are in talks to merge their business with one another. If the merger happens, the new entity will become the biggest private life insurer. According to CNBC sources, the boards of HDFC and Max Life will meet in Mumbai on June 17 to discuss the possibilities and the way ahead.

HDFC is the parent company and has a joint venture with HDFC Life, where HDFC owns 61.63 per cent stake, UK’s Standard Life owns 35 per cent and Azim Premji the Indian business tycoon and the chairman of Wipro owns 1 per cent stake. 

The talks are in the nascent stage and if the deal rolls out it will create the market value of about Rs 50000 crores. Currently LIC of India is the market leader in the insurance segment with a market share of 70 per cent. The total industry value amounts to Rs 25 lakh crores.

Comparing, the valuation metrics, HDFC Life has a upper hand as it has Rs 74247 crore Asset under management(AUM), whereas the AUM of Max Life stands at Rs 35824 crore.

However, the shares of the parent company HDFC have opened in green on June 17 on the news. The shares as at 9.51 am have gained as much as 1.55 per cent and are trading at Rs 1219.95.

The shares of Max Financials which owns 68.01 per cent stake in Max Life on an intraday basis have gained as much as 18.60 per cent as at 9.57 am,/and  are trading at Rs 507.45.