Make changes to deal structure: Irdai to Axis Bank, Max Financial Services

The Insurance Regulatory and Development Authority of India (Irdai) has communicated to and Services, which entered into an agreement in April whereby the lender would have increased its stake in life insurance company Max Life promoted by Services, to make some changes to the value creation options that the two firms were exploring. has asked them to factor in some alternate mechanisms subject to regulatory approvals.

In an exchange filing, said, “Earlier, and Max Financial had agreed to certain value creation options and related rights. Based on correspondence from received by the firm, and the company have agreed to make some changes to the value creation options and factor in some alternate mechanisms subject to regulatory approvals and as maybe permitted under applicable law.” Axis Bank also made a similar statement to the exchanges.

According to sources, there’s a clause in the deal that says that after a little over five years, the entity will go for a listing on the bourses. However, if the listing does not happen, Axis Bank would swap the unlisted Max Life’s 30 per cent holding with the listed entity Max Financial Services, depending on the swap ratio. Further, if even that is not possible, then Axis Bank would have a put option to sell its shares in Max Life at a pre-determined price to Max Financial. has raised objections to these options included in the deal, said a source, adding there would tweaks to this part.

Neither Axis Bank not Max Financial provided details on Irdai’s objections.

Axis Bank was looking to buy additional 29 per cent in Max Life Insurance for an estimated price of Rs 1,592 crore, raising its holding in the insurer to 30 per cent after the completion of the deal. As per the deal, Max Financial Services would have held the remaining 70 per cent in the joint venture.

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