Max Ventures & Industries surged 15.96% to Rs 77.75 at 10:00 IST on BSE after the company said that it will sell 22.5% stake to a subsidiary of New York Life Insurance Company.
The announcement was made after market hours yesterday, 9 January 2017.Meanwhile, the S&P BSE Sensex was up 124.44 points or 0.47% at 26,857.70.
Huge volumes were witnessed on the counter. On the BSE, 14.09 lakh shares were traded on the counter so far as against the average daily volumes of 1.08 lakh shares in the past one quarter. The stock had hit a high of Rs 79.15 and a low of Rs 74.80 so far during the day. The stock had hit a record high of Rs 85.80 on 7 July 2016. The stock had hit a record low of Rs 43.30 on 21 November 2016.
The stock had outperformed the market over the past one month till 9 January 2017, gaining 12.97% compared with the Sensex's 0.08% fall. The scrip had also outperformed the market in past one quarter, rising 32.77% as against the Sensex's 4.76% fall.
The small-cap company has equity capital of Rs 53.45 crore. Face value per share is Rs 10.
The board of Max Ventures and Industries (MaxVIL) made a preferential offer, subject to shareholders' approval, to issue common stock to a subsidiary of New York Life Insurance Company. New York Life is the largest mutual life insurance company in the United States and one of the largest life insurers in the world, with more than $500 billion under management.
Subject to MaxVIL's shareholders approval, a subsidiary of New York Life Insurance Company will acquire a 22.51% equity stake in MaxVIL at an offer price of Rs 78 per share aggregating to Rs 121 crore on a diluted basis and will be entitled to one nominee director to the board of MaxVIL.
The offer price of Rs 78, was at a premium of 16.33% to the closing price of Rs 67.05 hit yesterday, 9 January 2017.
The board of MaxVIL also proposed an allotment of 34.48 lakh share warrants to the promoter group, namely, Shiva Enterprises, equivalent to 4.76% of the post-issue share capital of the company on a fully diluted basis assuming full conversion of the warrants. These share warrants will be issued at Rs 78 per warrant aggregating to Rs 26.9 crore and will be convertible into equivalent equity shares within 18 months, taking the shareholding of the promoter group in MaxVIL to around 38.02% on fully diluted basis.
New York Life and the Max Group have a longstanding association. In 2001, the two entities partnered to set up Max New York Life one of India's largest private life insurance companies. In 2012, New York Life sold its 26% stake in Max New York Life to Mitsui Sumitomo Insurance Co. Ltd., after which the life insurance company was renamed Max Life.
Max Ventures and Industries' consolidated net profit fell 90.4% to Rs 0.45 crore on 4% decline in net sales to Rs 169.89 crore in Q2 September 2016 over Q1 June 2016.
MaxVIL is the newest entity in the Max Group of companies that came into existence after the erstwhile Max India Group was demerged into Max Financial Services Limited, Max India Limited and Max Ventures and Industries Limited (MaxVIL).
MaxVIL has four distinct business verticals Max Speciality Films (manufacturing), Max Estates (real estate), Max Learning (education) and Max I. (i.e. intellectual and financial support). Other investors in MaxVIL include International Finance Corporation (IFC) and Reliance Mutual Fund.
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