PremiumAxis Bank on Tuesday informed that it has entered into revised agreement after IRDAI guidance and it will acquire the remaining stake in Max Life Insurance at fair market value using discounted cash flows instead of valuation.
“We would like to inform you that Axis Entities have entered into revised agreements with Max Financial on January 9, 2023, agreeing that the valuation for the right to acquire the balance 7.00% equity stake of Max Life would be at Fair Market Value (FMV) using Discounted Cash Flows instead of valuation as per Rule 11UA of the Income Tax Rules, 1962. This revision has been done consequent to the guidance received by Max Life from the Insurance Regulatory and Development Authority(IRDAI)," Axis Bank announced in an exchange filing.
The lender in 2021 had announced the acquisition of equity shares of Max Life Insurance Company Limited (Max Life), a material subsidiary of Max Financial Services Limited (Max Financial) by Axis Bank and its subsidiaries, i.e., Axis Securities Limited and Axis Capital Limited under definitive agreements.
Accordingly, Axis Entities had collectively acquired 12.99% of the equity share capital of Max Life. In addition, Axis Entities have a right to acquire an additional stake of upto 7.00% of the equity share capital of Max Life, in one or more tranches at a valuation as per Rule 11UA of the Income Tax Rules, 1962.
Max Life’s holding company Max Financial Services Limited and Axis Bank had first announced their intent to bring in the latter as a strategic partner in Max Life in February 2020. Axis Bank had in April 2022 announced its intent to purchase a 30% stake in Max Life Insurance for a sum of around ₹1,530 crore.
Shares of Axis Bank were trading nearly 2% lower at ₹944 apiece on the BSE. The private lender's stock has declined over 27% in a year's period as compared to 0.6% fall in benchmark Sensex.