Axis Bank, along with its subsidiaries — Axis Capital Limited and Axis Securities — will now together acquire up to 19.002 per cent stake in Max Life Insurance instead of the earlier plan by the private sector lender to pick up 17 per cent stake in the life insurance company.
The move comes after the Reserve Bank of India advised Axis Bank that its application for direct acquisition of 17.002 per cent stake in Max Life Insurance was not considered.
“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 on Friday.
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, has 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 Limited will together acquire up to 3 per cent of the share capital of Max Life.
In addition, the two will also have the 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.
“The transaction is subject to conditions precedent, including regulatory approvals,” Axis Bank said.
Change in plan
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, it had said it decided to cut down on its investment plans in Max Life Insurance.
While it had not elaborated on the reasons for this change in plan it was understood that the Insurance Regulatory and Development Authority of India had wanted some changes in the proposed agreement.
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