IRDA approves 26% stake transfer in Max New York Life: Reports

On 4th June, the Competition Commission of India had approved the stake transfer between the companies

June 21, 2012 3:30 IST | India Infoline News Service
The Insurance Regulatory and Development Authority (IRDA) has approved 26% stake transfer in private life insurer Max New York Life Insurance (MNYL) to Japan's Mitsui Sumitomo Insurance Company, according to media reports.

MNYL is a joint venture between Max India, one of India’s leading multi business corporations and New York Life Enterprises LLC, a subsidiary of New York Life. With the 26% stake transfer, New York Life will exit from the joint venture with Max India and Max India will be the holding company of MNYL, the reports added.

On 4th June, the Competition Commission of India (CCI) had approved the stake transfer between the companies. CCI in a notification had said, “...the Commission is of the opinion that the proposed combination is not likely to have an appreciable adverse effect on competition in India and therefore, the Commission hereby approves the proposed combination.”

According to the share purchase agreement, Mitsui Sumitomo will acquire 16.63% equity share capital of MNYL from New York Life and 9.37% from Max India. By way of a separate agreement, US-based New York Life has transferred its 9.37% shares in MNYL to Max India.

Subsequent to the proposed combination, New York Life would completely exit from MNYL, and Max India and Mitsui Sumitomo would control MNYL with Mitsui having 26% shareholding. According to existing laws, foreign direct investment up to 26% is allowed in the insurance sector in India.

After the arrangement, Max India hold 69.78% of equity capital of MNYL, while, Axis Bank would continue to hold 4%.

Mitsui Sumitomo is primarily engaged in non-life insurance business around the world. And it is not engaged in life insurance sector in India. It is present in India through its investment in Cholamandalam-MS General Insurance Company with 26% equity shares and in Cholamandalam-MS Risk Services with 50% share.

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