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| Max starts talks to sell 23% to New York Life |
| Arun Kumar / New Delhi Jun 17, 2009, 00:23 IST |
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Awaiting insurance Bill amendment, expects Rs 3,000 crore from the deal
 With the Insurance Laws (Amendment) Bill awaiting Parliamentary approval, Max India, Analjit Singh’s flagship company, has started discussions on divesting 23 per cent out of its 74 per cent shareholding in Max New York Life Insurance to its foreign partner.
The Bill is expected to raise the foreign direct investment (FDI) limit in insurance joint ventures from 26 to 49 per cent. It was introduced in the Rajya Sabha in December 2008 but did not come up for discussion. The issue of raising FDI in insurance was, however, opposed by the Left, on which the previous United Progressive Alliance government depended for support.
Max India may mop up around Rs 3,000 crore from this divestment, sources said.
Talking to Business Standard, Analjit Singh, chairman of Max India and Max New York Life Insurance, said he hoped to complete the transaction in six months, subject to the appropriate changes in the insurance laws.
In October 2008, New York Life International Chairman and CEO Richard Hucci had said he would like to raise New York Life’s investment in the company because “we think it is a good investment”.
Like Max New York Life, other joint ventures in the insurance industry are beginning to hold a similar discussion, an investment banker said.
Max India is also in discussion with New York Life Insurance to appoint two investment bankers to arrive at a fair market value of the insurance business.
Under the agreement between Max India and New York Life, the foreign partner has the right to increase its holding to 49 per cent, subject to changes in the legal system, at a 10 per cent discount to the fair market price by the Indian promoters.
Meanwhile, Singh said that the company has a firm plan to break even by March 2012. “We are working in that direction and I am quite confident of meeting that target,” he added.
“Around that time, the company may explore the possibility of listing in India. Although New Life is a mutual company (not listed on the stock exchanges), we have held discussions on this issue with them and they are not averse to the suggestion of listing on the bourses,” Singh said.
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