MSI is a part of the world’s 7th largest MS&AD Insurance Group Holding of Japan. Max Financial Services and MSI are 73:25 joint venture partners in India’s fourth largest private Life Insurer Max Life Insurance Company.

This will enable the Company to simplify the shareholding structure in its subsidiary and have more flexibility to attract strategic investments in Max Life in the future and yet maintain its significant majority ownership.

The transaction will also provide MFS the option to purchase from MSI its balance shareholding in Max Life for cash at a price of Rs. 85 per share.

The transaction structure will involve MSI subscribing 75,458,088 shares of MFS having a par value of Rs. 2/- each at a price of Rs. 565.11 per share aggregating to 21.87% of the paid-up equity share capital of the Company on the date of allotment of the aforesaid fresh shares.

In consideration, MFS will receive 394,775,831 shares of Rs. 10/- each from MSI at a price of Rs. 108.02 per share translating into 20.57% stake of MLIC. Pursuant to this, the equity stake held by MFS in Max Life will increase to 93.10%. The transaction will lead to a change in MFS’ shareholding pattern as below:

MFS is listed on the National Stock Exchange and Bombay Stock Exchange. Its sole operating subsidiary Max Life is the largest non-bank owned private life insurer in India. Max Life has been at the forefront of the current buoyant phase in the Indian Life sector. For nine months ending December 31, 2019, Max Life reported Market-Consistent Embedded Value (MCEV) of Rs. 10,077 Crore; an Operating Return on EV (RoEV) of 18.4%; Value of New Business1 (VNB) at Rs. 576 Cr., growing 24% YoY and the New Business Margin2 (NBM) of 21%, 60 bps higher YoY.

Mohit Talwar,  MD,  Max  Financial Services and  Vice Chairman, Max Group, said, “We value MSI as our long term partners in the life insurance business and we are confident that they will continue to provide their expertise and counsel to MFS and Max Life through the Board Governance mechanism. This transaction makes the holding structure simpler and helps consolidate our shareholding in Max Life which is expected to benefit all our shareholders by attracting more investor interest.”

The transaction is subject to requisite approvals and is expected to be concluded by June 2020.