So far the dialogue, negotiation, discussion shows an indication that IDBI Bank and Federal Bank will not be in a position to accede to those pre-conditions put by us, said Analjit Singh, founder and Chairman, Max Group.

Watch:

Bidding for IDBI Federal Life Insurance without assurance not making any sense, says Max Group

Speaking exclusively to CNBC-TV18, he said Max Life Insurance has decided to continue to focus, build, and invest in our two most powerful bancassurance partnerships, Axis Bank and Yes Bank.

Edited Excerpts:

The story that our colleague has broken is that, you have written to IDBI Federal Life Insurance, want to buy the company and the critical part of your terms are not being accepted by IDBI Bank as well as Federal Bank. Can you comment on that?

I am not sure whether we have written to IDBI Federal Life Insurance or JP Morgan, but this is correct. The background is we had made a very aggressive bid for IDBI Federal Life Insurance and discussion so far suggests that the prerequisites we had asked for such as performance guarantees, claw backs, etc. are unlikely to be given by IBDI Bank and Federal Bank. Hence, we believe that the risk reward equation is not in Max Life Insurance's favour or in the favour of Max Financial Services shareholders. So, we have therefore decided to continue to focus, build, and invest in our two most powerful bancassurance partnerships, Axis Bank and Yes Bank.

The beauty is that the business has hit unprecedented levels of achievement from its inception. So this year, we have already achieved 20% growth in embedded value, 20% return on embedded value, 20% growth in new business margins and we are now hitting at 25-25-25 levels. So, basically the boards of both companies took a view that why rock the boat and disturb a winning streak considering all the risks that come with the merger and integration. So, we are staying on course with Axis Bank and Yes Bank for our banca relationships. That is the brief background.

You are saying that you have given up on this deal, is that the way we have to understand it?

That is a good way of asking the question. I think let us put it this way, that we had made an aggressive bid and some prerequisites of those bids were that there would be some assured levels of performance, there would be a claw back in case those performance levels were not achieved over 10 years. So far the dialogue, negotiation, discussion shows an indication that IDBI Bank and Federal Bank will not be in a position to accede to those pre-conditions, which were a part of conditions precedent to our bid.

If that is the case, yes, we will. I cannot say, we have given up because, we have written to them and we have not heard back from them as yet. However, if they were to come back and say okay, we have not given up. However, if we see the way the discussion is going, and they do not accede to those request, then in that case, we would have given up or we will give up.

I am given to understand it's a 48 hour deadline and that expires tomorrow.

Some of these things are technical. I know it's around end of day tomorrow, I am not sure if it's 48 hours or 42 hours, but it is end of day of business tomorrow.

Is your discomfort arising only from the fact that there is a possibility of change of control at IDBI Bank and you want to make sure that even if it were merged into any other entity, your exclusivity with IDBI Bank should continue, is that your main worry?

That is one of three reasons. That is one big reason. The second is even if IDBI Bank and Federal Bank stays within its current ownership construct and they are not able to achieve the sales volumes that we expect. Third, the debts are now clear regarding Axis Bank and Yes Bank, particularly Axis Bank. So, we believe that since we have such a strong level of integration and working with Axis Bank, why even distract ourselves from just continuing to build on success with Axis Bank and Yes Bank. So, therefore we feel in absence of those assurances, it is not worth it.

Going back in time, when the binding bids were placed, these conditions which are arising now weren't they cleared at that time? Why was there no communication before actually placing the bids and coming out so strongly for IDBI Federal Life Insurance?

These are conditions that were sort in the bid as a part of the bid. The process of negotiation and so on so forth is not completed, but as I said in the beginning, we are given to understand from the negotiations that have taken place so far, that those requests or those conditions will not being acceded to and in sort of anticipation or in reaction or in response to that being the case, we are saying thank you but no thank you.