Max India Ltd plans to raise equity funds of about Rs 500 crore in the next six months to part finance its planned investments in its insurance subsidiary – Max New York Life (MNYL) – for the current fiscal.
Analjit Singh, Chairman and Managing Director of Max India, stated this at a press conference to announce the financial performance of Max India for the fourth quarter of 2008-09 and for the entire financial year.
Earlier, Max India had planned to raise about Rs 1,000 crore this fiscal to support the business growth of MNYL. But now with the foreign direct investment (FDI) limit increase in insurance sector looking imminent, the company has scaled down the capital raising plans. Currently, MNYL is capitalised at Rs 1,782 crore. Indications are that Max India would pump in about Rs 700 crore in MNYL this fiscal.
This announcement comes on the heels of International Finance Corporation (IFC) investing Rs 150 crore in Max India through preferential allotment route.
The current joint venture agreement between Max India and New York Life provides for the latter to raise its stake in Max New York Life to 49 per cent once the necessary legal framework is in place.
Meanwhile, the board of directors of Max India on Friday gave its nod to consumer forum for amending the existing joint venture arrangement in regard to Max Bupa Health Insurance Ltd (MBHI). In the revised arrangement, Max India would have 74 % shareholding in MBHI with the balance 26 per cent to be held by Bupa Finance Plc, UK.
Initially, it was proposed that Max India would hold 50 % stake in MBHI, 26 % by Bupa Finance Plc, UK and the balance 24 % by Analjit Singh and his associates.
MBHI is likely to start its operations in December this year, Singh said.
On MNYL, Singh announced that the “embedded value” of the life insurance business has recorded a healthy growth of 74 per cent to Rs 2,284 crore. He also announced that Max India expects its insurance subsidiary (MNYL) to be break-even at the profit before tax (PBT) level in financial year 2011-12.