Axis Bank board on August 9 gave its nod to Rs 1,612-crore infusion in Max Life Insurance Company Limited, a material subsidiary of Max Financial Services Limited. The bank said the Acquisitions, Divestments and Merger Committee has approved the proposal for the infusion through preferential allotment.
"... Axis Bank Limited (“Axis Bank”) and its subsidiaries, i.e., Axis Securities Limited and Axis Capital Limited (together referred to as “Axis Entities”) have entered into agreements (including amendments thereto) with Max Financial Services Limited (“Max Financial”), with regard to acquisition of equity stake of Max Life Insurance Company Limited (“Max Life”) and matters incidental thereto," Axis Bank's exchange filing said.
"...we would now like to inform you that the Acquisitions, Divestments and Merger Committee of the Board of Directors of the Bank at their meeting held on August 9, 2023 has approved the proposal for the Axis
Bank to infuse Rs. 1,612 crores in Max Life through preferential allotment, resulting in Axis Bank’s direct stake in Max Life increasing to 16.22% and the collective stake of Axis Entities increasing to 19.02%," Axis Bank also said in the exchange filing.
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 (arrived at as per extant regulations and including a share premium of Rs. 103.06 per equity share), Axis Bank said.
The proposed acquisition, the bank said, would strengthen its position in life insurance business. Post completion of this acquisition, it will increase the total holding of the bank (along with its subsidiaries e.g. Axis Securities Ltd. and Axis Capital Ltd.) in Max Life from 12.99 percent to 19.02 percent, Axis Bank informed stock exchanges.
The proposed acquisition would be done at Fair Market Value using Discounted Cash Flow method, Axis Bank stated. The indicative time period for completion of the acquisition is four to six months.
The completion of the acquisition would depend upon receipt of regulatory approvals from IRDAI, PFRDA, CCI and others, the bank said. The bank has requisite approval from the Reserve Bank of India for the proposed acquisition.
Max Life Insurance Company Limited, incorporated on July 11, 2000, recorded a turnover of Rs 25,342 crore, Rs 22,414 crore, and Rs 19,018 crore in FY23, FY22 and FY21 respectively.
On August 9, Axis Bank shares settled at Rs 950 apiece on the NSE, which was down Rs 2.90 or 0.30 percent than the previous day's close.
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