Axis Bank to increase stake in Max Life to 16.22% from 9.99% by investing ₹1,612 crore through a preferential share allotment. Through this latest investment, Axis Bank, along with its subsidiaries Axis Securities and Axis Capital, would own 19.02% of the insurance provider after purchasing a 12.99% share in Max Life in 2021.
“This is with reference to our earlier letters dated April 28, 2020, July 23, 2020, August 24, 2020, October 30, 2020, February 24, 2021, April 6, 2021, and January 10, 2023, informing that Axis Bank Limited (“Axis Bank”) and its subsidiaries, i.e., Axis Securities Limited and Axis Capital Limited (together referred to as “Axis Entities”) have entered into agreements (including amendments thereto) with Max Financial Services Limited (“Max Financial”), with regard to the acquisition of equity stake of Max Life Insurance Company Limited (“Max Life”) and matters incidental thereto,” Axis Bank in a stock exchange filing said.
In this regard, the Acquisitions, Divestments and Merger Committee of the Board of Directors of the Bank has approved the proposal for the Axis Bank to inject Rs. 1,612 crores in Max Life through preferential allotment. This merger will increase Axis Bank’s direct stake in Max Life to 16.22 per cent and the combined stake of Axis Entities to 19.02 per cent.
The aforementioned transaction would be carried out at fair market value utilising the discounted cash flow approach, as stated in the letter dated January 10, 2023. The Bank will do a Share Subscription right away.
Agreement with Max Life for the proposed purchase of 14,25,79,161 fully paid-up equity shares with a face value of Rs. 10 each through subscription to the preferential issue at a fair market value of Rs. 113.06 per share (determined in accordance with existing regulations and including a share premium of Rs. 103.06 per equity share).
Regulatory permissions, including those from the IRDAI, PFRDA, CCI, and any other necessary approvals, are required for the transaction. The Reserve Bank of India has granted the Bank the necessary approval for the proposed acquisition.
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“The proposed transaction is subject to receipt of shareholders’ approval and regulatory approvals from IRDAI, PFRDA, and CCI. This capital infusion will help Max Life to support its future growth ambitions, to augment its capital position, and to improve solvency margins. On the allotment of the said share capital to Axis Bank Limited, the shareholding held by Max Financial in Max Life will stand reduced to 80.98% from the current level of 87%,” said Max Financial in a stock exchange filing.
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