IRDAI has asked Axis Bank to rework its proposal for buying an additional 10% in Max Life Insurance, as informed by the inside sources. The IRDAI has asked the Axis Bank to come up with a fair value deal while turned down the current proposal of buying the stake at face value. Thus, Axis must pay more if it wants to meet regulatory compliances and enhance its stake in the insurer. Max Financial Services, has a market capitalisation of Rs 11,209 crore. “The matter was brought to the regulator and it has asked Axis Bank to rework the structure so that it pays market value for the transaction,” said a source.
Earlier attempt of Max Life to merge with HDFC Life and later to acquire IDBI Federal Life Insurance failed due to structure and valuation issues. In 2011, Axis Bank acquired a 4 per cent stake from Max India in its joint venture Max Life Insurance for an undisclosed value. Max Life had entered into a long-term agreement with Axis Bank, and that arrangement is valid at least until 2021. In order to extend this arrangement, Max will have to either get into corporate agency or the equity structure tie-up.
