Don't know if AG sending HDFC-Max Life merger proposal back to IRDA is true: Mistry

Sources say Attorney General Mukul Rohtagi has returned the HDFC-Max Life merger proposal back to the Insurance Regulatory and Development Authority of India (IRDA) without giving any opinion. The insurance regulator had sought AG's opinion for the legal validity of the proposal.

Keki Mistry, Vice Chairman, and CEO, HDFC spoke to CNBC-TV18 on the above matter.

Below is the verbatim transcript of the interview.

Surabhi: You just heard our colleague outline the sequence of events and now this is going back to IRDA. What are your first thoughts and what is your plan of action?

A: First of all we don’t know whether this is true or not. However, theoretically assuming for a moment that it was true and that IRDA was not to give the approval, then there is always an alternate structure we can look at. However, what you must keep in mind is that when this proposal came to us, this proposal of this merger came to us, it came to us through an investment banker, and it came to us at a time when we were looking at doing an IPO ourselves in HDFC Life. So, therefore the fallback of doing an IPO in HDFC Life is very much there.

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So, if for a moment you assume that this structure is not acceptable to IRDA, I repeat this is a theoretical assumption, if that is not approved by IRDA, an alternate structure can be tried, that can be worked quickly.

If that theoretically also does not happen, then the IPO is always possible. When this proposal came to us a year and a half ago, little over a year ago, at that time we were actually seriously considering an IPO. We had done a lot of preparatory work, the offering circular we had done a lot of work on, so, a lot of preparatory work has already got done. We can do the IPO very quickly if the need arises.

When this proposal came little over a year ago, at that time we were actually seriously considering an IPO. We had done a lot of preparatory work, the offering circular we had done a lot of work on, so, a lot of preparatory work has already got done. We can do the IPO very quickly if the need arises.

Reema: Is there a possibility that if we have to stick with the merger, the merger ratios will have to be reworked?

A: I don’t know how all that alternate structure will work because that is something which we will have to sit down and work through. However, as I said earlier, even for a moment if you assume that the alternate structure for whatever reason does not work theoretically, then the IPO option is always there which is something which was always contemplated.

Surabhi: Have you had any conversations with Max, would they be okay with the possibility of reworking this merger if required?

A: I would think so. I would think this is very theoretical now. So, we have to naturally discuss this with the Max people which we would do once we get some clarity on whether this information that you are talking about is true or not.

Reema: Did you not check back with the IRDA about their opinion?

A: When we spoke to IRDA they had said they referred it to the Attorney General. Now after it was referred to the Attorney General, we have not reached out to the Attorney General.