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New York Life exits Max JV,Mitsui buys 26% for Rs 2,731 crore

The transaction is valued MNYL at Rs 10,504 crore. While the company will now be rebranded as Max Life Insurance,Max India’s majority stake will remain unchanged at 70 per cent.

Written by Express News Service | New Delhi | Published: April 13, 2012 1:38 am

Japanese insurance major Mitsui Sumitomo has bought 26 per cent stake in India’s fourth largest life insurance company,Max New York Life Insurance (MNYL),for about Rs 2,731 crore. Max New York Life is a joint venture between Max Group and New York Life Insurance.

The transaction is valued MNYL at Rs 10,504 crore. While the company will now be rebranded as Max Life Insurance,Max India’s majority stake will remain unchanged at 70 per cent. In a two-stage deal,New York Life will sell 16.63 per cent of its holding to Mitsui. The remaining 9.37 per cent would be sold to Max India for Rs 182 crore. Max India will then sell the 9.37 per cent stake to Mitsui for Rs 984 crore. The stake sale will translate into a windfall gain of Rs 802 crore for Max India. Max India shares today closed 8.34 per cent higher at Rs 203.95.

“For the next stage of MNYL’s growth and development,we view Mitsui as an ideal partner. They are a financially sound and respected player with a strong international business and strategic aspirations to participate in the growth of life insurance business in India,” said Analjit Singh,Chairman,Max India.

MNYL has a solvency ratio of 539 per cent as on December 31,2011,above the statutory requirement of 150 per cent. Its current assets under management is at over Rs 17,000 crore with a market share of 8.6 per cent within the private life insurance space. Mitsui Sumitomo is the world’s seventh largest non-life insurance group,with a market cap of $12.6 billion.

“MNYL is the best possible life insurance company that we could have partnered with for our entry into the Indian Life Insurance space,” said Yasuyoshi Karasawa,President,CEO,Mitsui Sumitomo Insurance. This is the second largest foreign investment in the life insurance sector in India. Less than a year ago,another Japanese major Nippon bought 26 per cent stake in Reliance Life Insurance for about Rs 3,062 crore with a valuation of Rs 11,500 crore.

Max India,MD Rahul Khosla said,“Obviously from our perspective there are worthwhile tax advantages in doing so. We are able to sell shares in such a way that from tax submission perspective,they make more sense for what tax rates are applied.”

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