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Axis Bank, on Friday, announced a revised plan to acquire stake in Max Life Insurance. Now, the private sector lender along with its subsidiaries – Axis Capital Limited and Axis Securities – will together acquire up to 19.002 per cent stake in Max Life Insurance, instead of the earlier plan to pick up 17 per cent stake in the life insurance company.
Direct acquisition
The move comes after the Reserve Bank of India did not consider Axis Bank’s application for direct acquisition of 17.002 per cent stake in MaxLife Insurance.
“In response to Axis Bank’s application to the RBI for directly acquiring 17.002 per cent of the equity share capital of Max Life, the RBI has advised Axis Bank that the application for direct acquisition of 17.002 per cent has not been considered,” the bank said in a regulatory filing.
The lender has also been advised to be guided by Para 5(b) of Master Direction- RBI (Financial Services provided by Banks) Directions, 2016, it further said.
Accordingly, Axis Bank, along with its two subsidiaries, have agreed to enter into revised agreements with Max Financial for acquisition of up to 19.002 per cent of the equity share capital of Max Life.
Under the revised agreements, Axis Bank will acquire up to 9.002 per cent stake in Max Life, and Axis Capital and Axis Securities will together acquire up to 3 per cent of the share capital of Max Life.
In addition, the two arms – Axis Capital and Axis Securities – will also have the right to acquire an additional stake of up to 7 per cent of the equity share capital of Max Lifein one or more tranches.
“The transaction is subject to conditions precedent, including regulatory approvals,” said Axis Bank.
Axis Bank and Max Financial Services had, on April 28, announced the signing of definitive agreements to become joint venture partners in Max Life Insurance. Under the plan, Axis Bank was to acquire 29 per cent stake in Max Life and hold a total 30 per cent stake in the insurer.
However, on August 24, the bank decided to cut down on its investment plans in Max Life Insurance to acquire 17.002 per cent of the equity share capital of the life insurer.
While it had not elaborated on the reasons for this change in plans, it was understood that the Insurance Regulatory and Development Authority of India wanted some changes in the proposed agreement.
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