Axis Bank is looking to buy 6 per cent more stake in JV Max Life Insurance for Rs. 1,612 crore by way of preferential issue of 14.3 crore equity shares.
This will take Axis Bank’s shareholding in the insurer to 16.2 per cent and Axis Group’s shareholding to 19 per cent from the current level of 13 per cent. On the other hand, JV partner and promoter Max Financial Services’ shareholding will fall to 81 per cent from 87 per cent.
The share issue will be at fair market value of Rs. 113.06, determined on the basis of DCF (discounted cash flow) methodology. The bank will retain the right to acquire an additional 0.98 per cent stake from Max Financial in the next 15 months.
The proposed transaction, expected to be completed in 46 months, is subject to approval of shareholder and regulators including IRDAI, PFRDA and CCI. The RBI has approved the proposed stake buy the entities informed the exchanges.
“The increase stake in Max Life by Axis Bank, has been long awaited and will lead to a more natural balanced ownership level considering the importance of the power of distribution through the Banca channel of Axis Bank,” Chairman Analjit Singh said.
Max Life will use the proceeds to support future growth ambitions, augment its capital position and improve solvency margins, with MD and CEO Prashant Tripathy saying that the additional investment will help strengthen the franchise, with a focus on driving new and strategic partnerships to unlock growth along with building momentum in the existing ones.