Axis Bank on Wednesday said it will raise its stake in Max Life to 16.22% from 9.99% by infusing Rs 1,612 crore through a preferential allotment of shares. Axis Bank, along with its entities (Axis Securities and Axis Capital), had acquired a 12.99% stake in Max Life in 2021, and through this new investment they will own 19.02% in the insurer. Max Financial Services, the holding company of Max Life, will hold about 80.98%.
Axis Bank in a stock exchange filing said the acquisitions, divestment and merger committee of its board has approved the proposal to infuse Rs 1,612 crore in Max Life through preferential allotment. “The bank will now enter into a share subscription agreement with Max Life for proposed acquisition through subscription to the preferential issue of 14,25,79,161 fully paid-up equity shares of face value of Rs 10 each at a fair market value of Rs 113.06 per share,” it said.
Currently, Max Financial holds an 87% in Max Life. On completion of the proposed capital infusion, Max Financials’ shareholding will stand reduced to 80.98%.
In a stock exchange filing, Max Financial said the proposed capital infusion will help the insurer to support its growth ambitions, augment capital position and improve solvency margins.
Max Financial and Axis Bank have agreed, inter-alia, on the governance structure of the insurance company. Five nominee directors of Axis entities and three nominee directors of Max Financial will be there on the board of Max Life. “Quorum rights for Axis entities with participation of two directors nominated by the Axis entities and one director nominated by Max Financial to form the quorum for board/committee meetings of Max Life,” according to the Max Financial’s stock exchange filing.
The transaction is subject to various regulatory approvals. Axis Bank has requisite approval from the Reserve Bank of India for the proposed acquisition.