Deal talks between Max Financial Services and Hero Corporate Services hit a roadblock

Max Financial Services has yet again found itself in an uncertain situation on its transaction with Sunil Munjal’s Hero Corporate Services. The deal involving Hero Corporate buying a partial stake from Analjit Singh in Max Financial Services has hit a roadblock, sources privy to the developments told CNBC-TV18.

Hero Corporate and Analjit Singh were engaged in an 'exclusive’ negotiations to decide the deal contours, according to multiple people familiar with the development. The exclusivity period is valid till February 8, 2020.

Sunil Munjal was also in discussion with a few private equity players including US private equity firm Bain Capital for a tie-up to execute the said transaction.

The talks between Hero Corporate and Analjit Singh involved the former along with a private equity player picking up a partial stake from Analjit Singh in Max Financial Services.

Analjit Singh holds 28.31 percent stake in Max Financial Services and out of the total stake, 71.54 percent is pledged. Singh has been looking for buyers to sell his stake in order to deleverage his pledged position.

For Hero Corporate, the transaction would enable its entry into the life insurance sector as Max Financial Services owns 71.79 percent stake in Max life insurance arm.

According to sources, Analjit Singh has restarted talks with Axis Bank for the same transaction. The two entities even met very recently to discuss how they plan to take the transaction forward.

Any transaction with Axis Bank would also be beneficial for the bancassurance tie-up which the bank already has with Max Life Insurance but is only valid till 2021. Axis Bank’s distribution network contributed 59 percent to Max Life's new business premium (NBP).

The spokespersons for Max Financial Services, Axis Bank and Hero Corporate did not reply to CNBC-TV18’s query. CNBC-TV18 is also yet to receive a reply from Analjit Singh, founder of Max Group.