Max Financial Services Ltd (MFSL) on Thursday said it has received approval from the Department of Economic Affairs for swap of Mitsui Sumitomo Insurance Company's (MSI) stake in Max Life with the company. MFSL is the parent of Max Life.
In a regulatory filing, MFSL said it has received approval from the Department of Economic Affairs for the issue and allotment of 7,54,58,088 equity shares, equivalent to 21.87 percent of the paid-up share capital, of MFSL to MSI.
This preferential issuance is in consideration for the transfer of equity shares constituting 20.57 percent of the paid-up share capital of Max life Insurance Company Ltd held by MSI to MFSL as part of the share swap transaction, the filing added.
Max Financial Services presently holds a 72.5 percent stake in Max Life and MSI owns 25.5 percent stake.
The aforesaid transaction entails swapping by MSI of 20.6 percent stake that it holds in Max Life with a 21.9 percent stake in MFSL. This will result in MFSL's stake in Max Life increasing to 93.10 percent. However, the transaction will be subject to IRDAI approval.
CNBC-TV18's Yash Jain decodes the implications and contours of the transaction.