Indian private sector lender Axis Bank has cut down the size of the stake that it plans to purchase in Max Life Insurance from 29% to 17%, according to latest reports.
The move is said to be part of the bank’s effort to avoid regulatory hurdles. The insurance regulator reportedly raised concerns over certain clauses in the merger agreement, which was announced this April.
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Financial terms of the revised deal were not disclosed.
As per the deal announced in April, Axis Bank was to raise its stake in the insurer to 30% in a transaction valued at around INR15.90bn.
The bank currently has 1% holding in Max Life. It will own an 18% interest in the insurer after the closing of the deal.
“Max Life and Axis have made significant alterations in their proposed JV agreement to secure regulatory approvals and expedite closure of the deal. Max Life and Axis Bank have erased some key clauses in their agreement in order to convince Irdai,” two people aware of the development told Livemint.
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By GlobalDataAccording to the report, a clause to list Max Life through its combination with listed parent Max Financial Services has been scrapped.
The clause flouted Section 35 of the Insurance Act, 1938 that restricts the merger of an insurance company’s business into a non-insurance firm.
At present, Max Financial Services and Mitsui Sumitomo Insurance (MSI) own 72.5% and 25.5% stake, respectively, in Max Life.
