Mumbai, Jul 26 (PTI) Deepak Parekh, the chairman of the largest mortgage lender HDFC, today said the proposed merger of HDFC Life Insurance and Max Life has been called off and the company is now focused on taking its life insurance arm public through an IPO.

Parekh said the initial public offer or IPO is likely to come in by late November or in the first week of December.

HDFC Life and Max Life had proposed a merger last August where Max Life was to be merged first with Max Financial Services, its holding company.

Parekh said under section 35 of the Insurance Act an insurance company can only be merged with another insurer.

“The regulator Irdai has referred the matter the government and the Solicitor General took a view that Max Life will lose its insurance status when if merged with Max Financial Services and therefore it goes against section 35 of Insurance Act. So, our proposal was rejected,” Parekh told shareholders at the 40th annual general meeting of HDFC.

After spending one year in the process, insurance boards of HDFC Life and Standard Life decided to move forward with the IPO, he said.

Parekh said HDFC Life has already filed papers for an IPO with the Irdai. “We cannot have two things simultaneously.

So when we filed the prospectus we have to take a decision that merger is off and we will go for an IPO.” He said HDFC Life has to file an actuarial report and get a permission from Irdai to file for IPO with Sebi. The company expects to get the approval sometime mid-August and then it will file draft hearing prospects with Sebi.

“We hope that we can open the issue by end-November or in the first week of December, provided we get approval from Sebi,” Parekh added.

He, however, said the HDFC Life is open for merger with Max Life provided Max is willing to combine the two companies and demerge the finance business of Max Finance and give the shareholders of Max Finance Max Life.

“So, there are number of different structures one can look at. We are keen on the merger but at the moment we cannot do it so we are going for an IPO,” Parekh said, adding the general insurance arm HDFC Ergo he said company is still small and it is not ready for an IPO.

“We have to wait for two three years before we get some value,” he said.

This is published unedited from the PTI feed.