Axis Bank in a recent BSE filing informed that the Reserve Bank of India (RBI) has refused it to directly acquire 17% stake in Max Life Insurance. The private lender will now purchase shares in Max Life along with its subsidiaries. Axis Bank and its subsidiaries, i.e. Axis Capital Limited and Axis Securities Limited have agreed to enter into revised agreements with Max Financial for the acquisition of up to 19.002% of the equity share capital of Max Life.
“In response to Axis Bank’s application to the Reserve Bank of India or directly acquiring 17.002 per cent of the equity share capital of Max Life, the Reserve Bank of India has advised Axis Bank that the application for the direct acquisition of 17.002 per cent has not been considered,” it said in a regulatory filing. Earlier in August, Axis Bank had announced the direct acquisition of 17.002 per cent of equity share capital of Max Life Insurance Company Ltd, after it entered into a definitive agreement with Max Financial Services Ltd. It added that Axis Bank has been advised to be guided by the relevant regulations of RBI.
On Friday, Axis said that its total stake in Max Life Insurance will remain within the limits stipulated under the applicable laws and regulations. Under the revised agreements, Axis Bank will acquire up to 9.002 per cent of the equity share capital of Max Life, and Axis Capital Limited and Axis Securities Limited will together acquire up to 3 per cent of the share capital of Max Life.
Further, Axis entities will have a right to acquire an additional stake of up to 7 per cent of the equity share capital of Max Life, in one or more tranches, in accordance with existing laws and regulations. The revised agreements will supersede the previous agreements entered into between the parties. “The transaction is subject to conditions precedent, including regulatory approvals,” Axis Bank said.
Originally, Axis Bank was to acquire 29 per cent stake in Max Life. However, the Insurance Regulatory and Development Authority of India (Irdai) had then raised questions on the deal structure, following which some changes were made.
On Friday, Axis Bank shares closed 0.26 per cent lower at Rs 492.40 apiece on BSE, as compared to a 0.34 per cent fall in the S&P BSE Sensex.
