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IRDAI likely to take a call on Axis Bank-Max Life Insurance deal by month-end

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The wait for both companies may soon end, as sources in the Insurance Regulatory and Development Authority of India suggest that a final decision on the deal could be taken by month-end.

IRDAI likely to take a call on Axis Bank-Max Life Insurance deal by month-end
It was in April this year when Axis Bank announced acquiring 29 percent stake in Max Life Insurance and since then both companies - Max Financial Services and Axis Bank have been involved in the process of getting regulatory approvals for the transaction. The wait for both companies may soon end, as sources in the Insurance Regulatory and Development Authority of India (IRDAI) suggest that a final decision on the deal could be taken by month-end.
According to sources, the insurance regulatory body had raised queries with respect to the valuation at of the transaction. Axis Bank would be buying 29 percent stake in Max Life Insurance at Rs 28 per share. With the transaction, the lender would be able to take its stake in Max Life Insurance to 30 percent for a total consideration of Rs 1,592 crore.
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IRDAI had also raised queries on the Value Creations Options under which a 'put' option was given to Axis Bank which allowed the bank to exit the JV if the value creation options were not consummated within 63 months of closing the deal. Under the 'put' option, Axis Bank could sell its entire stake in Max Life Insurance at a price of Rs 294 per share to Max Financial.
Query was also raised on a clause related to a merger of Max Life with Max Financial Services in future.
Sources privy to the developments told CNBC-TV18 that Max Financial Services and Axis Bank submitted their clarifications on all queries raised last week. The two companies also had a meeting via video conferencing with the regulator. Sources added that the insurance regulator is broadly convinced with the clarifications submitted by the companies.
Axis Bank and Max Financial have already agreed to make changes to the Value Creation Clause and this was even informed to the exchanges in July.
According to multiple people familiar with the development, the two companies have also agreed to do away with the plan to merge Max Life and Max Financial Services.
Most of the larger issues with the deal have been ironed out and some procedural queries have been sent by the regulator to the two companies. The companies are expected to submit their reply by Monday and the regulator's examination is expected to conclude by next week.

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CompanyPriceChng%Chng
ICICI Bank676.65 20.70 3.16
ITC212.40 5.40 2.61
Wipro599.15 14.95 2.56
SBI Life Insura1,050.45 24.45 2.38
SBI428.90 6.85 1.62
CompanyPriceChng%Chng
ICICI Bank676.65 20.85 3.18
ITC212.35 5.30 2.56
SBI429.15 7.15 1.69
HCL Tech994.25 15.65 1.60
Axis Bank755.25 8.75 1.17
CompanyPriceChng%Chng
ICICI Bank676.65 20.70 3.16
ITC212.40 5.40 2.61
Wipro599.15 14.95 2.56
SBI Life Insura1,050.45 24.45 2.38
SBI428.90 6.85 1.62
CompanyPriceChng%Chng
ICICI Bank676.65 20.85 3.18
ITC212.35 5.30 2.56
SBI429.15 7.15 1.69
HCL Tech994.25 15.65 1.60
Axis Bank755.25 8.75 1.17

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