 "MFSL up 12%; hits 52-wk high on Axis Bank buying balance stake in Max Life")
Shares of Max Financial Services (MFSL), the holding company of life insurer Max Life Insurance, rallied 12.2 per cent to hit a 52-week high of Rs 886 on the BSE in Thursday’s trade.
The up move followed Axis Bank’s announcement on Wednesday that it will raise its 9.99 per cent stake in Max Life to 16.22 per cent by infusing Rs 1,612 crores in the entity.
This will further increase the bank’s total holding (with its subsidiaries Axis Securities and Axis Capital) in Max Life from 12.99 per cent to 19.02 per cent.
Additionally, Axis Entities would now have the right to purchase an additional 0.98 per cent stake in Max Life from MFSL.
In 2021, Axis Entities had entered into a deal with MFSL to acquire a 20 per cent stake in Max Life. They collectively acquired a 12.99 per cent stake in Max Life and had the right to acquire an additional stake of up to 7 per cent in the insurer.
Axis Bank will acquire the said remaining stake by subscribing to 14.26 crore preferential equity shares of Max Life at a fair market value of Rs 113.06 per share, it said in a filing on Wednesday.
On the allotment of the said share capital, MFSL’s shareholding in Max Life will stand reduced to 80.98 per cent from the present 87 per cent.
MFSL said that the proposed transaction is subject to receipt of shareholders’ approval and regulatory approvals from IRDAI, PFRDA and CCI.
“This capital infusion will help Max Life to support its future growth ambitions, augment its capital position and improve solvency margins,” it said.
As per Axis Bank, the acquisition would strengthen its position in the life insurance business. It expects the transaction to be completed in 4-6 months.
Meanwhile, for Max Life, the increased stake will lead to a more naturally balanced ownership level, considering the importance of the power of distribution through the Banca channel of Axis Bank, said the insurer’s management.
“The additional investment by Axis Bank will hugely strengthen our insurance franchise. On the back of our innovative and balanced product mix, and strong growth in proprietary business, we’ve delivered a strong quarter. We are focused to drive new and strategic new and strategic partnerships to unlock growth for the company along with building
momentum in the existing ones,” said Max Life MD and CEO Prashant Tripathy.
Further, MFSL has reported 19 per cent YoY consolidated revenue growth to Rs 4,730 crore, for Q1FY24. Consolidated net profit jumped 48 per cent annually to Rs 101 crore on account of higher investment income, said the company.
Its new business premium grew 25 per cent to Rs 1,857 crore during the April-June period, and the Annualised Premium Equivalent (APE) rose 10 per cent to Rs 1,113 crore driven by strong growth in proprietary channels.
