Max Financial Services Limited (MFSL) announced that it has received approval from the Department of Economic Affairs (DEA), Ministry of Finance for the issue and allotment of 7,54,58,088 equity shares of Rs. 2/- each (equivalent to 21.87% of the paid-up share capital) of MFSL to Mitsui Sumitomo Insurance Company (MSI).
This preferential issuance is in consideration for the transfer of equity shares constituting 20.57% of the paid-up share capital of Max life Insurance Company Limited (Max Life) held the by MSI to MFSL as part of the Share Swap Transaction. The transaction will be consummated upon receipt of approval from Insurance Regulatory and Development Authority of India (IRDAI).
Max Financial Services presently holds a 72.5% stake in Max Life and MSI owns 25.5% stake.
In essence, the aforesaid transaction entails swapping by MSI of 20.6% stake that it holds in Max Life with a 21.9% stake in MFSL This will result in MFSL's stake in Max Life increasing to 93.10%.
Commenting on the development, Mohit Talwar, MD, Max Financial and Vice Chairman, Max Group, said, "Once concluded post regulatory approvals, this transaction will mark an important step for Max Financial to consolidate its shareholding in Max Life paving the way for a new beginning in form of a joint venture with Axis Bank."
MFSL had recently announced that Axis Bank and its subsidiaries, Axis Capital Limited & Axis Securities Limited (together Axis Entities), have entered into agreements with Max Financial for acquisition of up to 19% stake in Max Life, in accordance with existing laws and regulations.
Max Life is the fourth largest private life insurer in India while Axis Bank is the third largest private bank. The two companies have had a successful business relationship for over a decade, providing long term saving and protection products to nearly 20 lakh customers. The total premium generated through this relationship has aggregated to over Rs. 40,000 crore. Both companies have invested extensively in product and need-based sales training, thereby leading to consistent increase in productivity.
Shares of Max Financial Services Ltd was last trading in BSE at Rs.612.65 as compared to the previous close of Rs. 619.2. The total number of shares traded during the day was 101269 in over 2282 trades.
The stock hit an intraday high of Rs. 625 and intraday low of 609. The net turnover during the day was Rs. 62949597.