Govt okays Rs 337 cr FDI proposal

The government today approved a proposal by Mauritius-based Parkville Holdings Ltd and Ensley Ltd to invest Rs 337 crore in Max India Ltd.

The proposal, cleared by Finance Minister P Chidambaram, on the recommendation of the Foreign Investment Promotion Board (FIPB), suggested the preferential allotment and acquisition of shares under an open offer by Parkville Holdings and Ensley in Max India.

The proposal relates to health care services,information technology and connectivity solution services along with clinical research in Nawanshahar, Punjab, an official statement said.

While Parkville Holdings proposed subscribing to one crore shares of Max India for Rs 200 each through a preferential allotment, Parkville and Ensley will acquire 68.6 lakh shares at Rs 200 each through an open offer.

Parkville Holdings and Ensley are two units of Warburg Pincus. Max India's board had approved in May last year the sale of shares worth Rs 200 crore or granting of a 29.2 per cent stake to Parkville, which had also planned to buy a 20 per cent additional stake in the Indian company from shareholders.

The proposal was cleared following a ruling by the insurance regulator that an Indian company with foreign equity held by entities other than its foreign partners in its insurance joint venture,would not be counted while calculating the foreign investment cap of 26 per cent.

This implies that the 26 per cent ceiling will not include the stake held by those foreign shareholders in the Indian promoter which have not subscribed to the equity of its insurance joint venture.

Max India holds 74 per cent in Max New York Life Insurance, with New York Life holding the remaining 26 per cent.