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 is increasing it’s stake to 19.02% by infusing Rs 1,612 cr in ML
- 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.
On February 15, 2024, BJP leader Subramanian Swamy moved the Delhi High Court alleging a scam of nearly Rs 5,100 crore in the way Axis Bank sold and purchased shares of ML between February 2016 and April 2021.
The plea claims that ML and MFSL reportedly allowed their shareholder Axis Bank Ltd and its group companies Axis Securities Ltd and Axis Capital Ltd to make “undue profits/gains from the purchase and sale of equity shares of ML in non-transparent manner thereby, violating the mandatory directions of the IRDAI”
Axis Bank termed the allegations unfounded and without any merit. It has informed to take all necessary regulatory approvals for sale/ purchase of shares of ML.
https://www.livemint.com/news/india/bjp-leader-subramanian-swamy-alleges-scam-in-axis-max-life-deals-11708022491012.html