Axis to increase stake in Max Life

Max Life (ML) is a subsidiary of Max Financial Services Limited (MFSL).

  • ML is currently 87% owned by MFSL and 13% by the Axis group.
    • In 2021, Axis Bank had announced the deal for the acquisition of a stake in ML
    • The lender then through its entities, had collectively acquired a 12.99% stake in Max Life.
    • The bank also had the right to acquire an additional stake of up to 7% in the insurer in one or more tranches.
  • Now consequent to the above right to acquire additional 7% stake in ML
    • Axis is increasing it’s stake to 19.02% by infusing Rs 1,612 cr in ML
      • Fair Market Value for fresh infusion is arrived @ Rs 113.06/ share using the DCF method
    • It will have right to acquire further 0.98% in future
  • Axis Bank has the requisite approval from the RBI for the proposed acquisition, but it requires consent from other regulators, including IRDAI, PFRDA, and CCI. The bank expects the transaction to complete in the next 4-6 months.

The transaction is pursuant to a previous agreement and hence not a surprise.

Some may indicate concern on the valuations, however given Axis’s size, would not matter.

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