Max India Ltd on Tuesday announced a comprehensive corporate restructuring of its diversified operations in India that will see a demerger of the holding company into three entities and an exit from clinical research business.
The board of directors of the company approved a plan to rename the existing company Max Financial Services Ltd (MFSL), which will solely focus on the life insurance business. Another vertical — Max India Ltd (MIL) — will comprise Max Healthcare, Max Bupa and Antara Senior Living while a third vertical — Max Ventures and Industries Ltd (MVIL) — will house Max Speciality Films.
The demerger is expected to be completed in 6-9 months and existing shareholders of Max India will see a three-way stock split among the new companies.
“This structural reconfiguration removes any confusion in the minds of investors on the core business of each vertical,” Max India chairman Analjit Singh said. “Each of these verticals are now focussed on specific areas of business and investors can now choose which sector they want to invest.”
Following the Ordinance that allows foreign firms to invest upto 49% in the insurance sector, the company said its partner British health insurer Bupa has exercised the option to raise its stake to 49% in Max Bupa Health Insurance. However, its other partner, Mitsui Sumitomo, in the group’s holding company is not obliged to to do the same, it added.
]“We are under no obligation to offer Mitsui Sumitomo to raise their stake to 49% in MFSL. We are not inviting anybody (to invest) but if somebody wants to talk, we are available,” Singh, the promoter of the group, added.
Singh also announced an open offer to raise his stake in Max Speciality Films (MVIL post demerger) from 41% to up to 75%. The firm has been valued at Rs 168 crore.“I want to give a fair deal to investors who want an exit option from this company,” Singh said.
Separately, the group will sell its clinical research arm to a Canadian firm for $1.5 million ( Rs 9.3 crore), as it was not able
to scale up the business due to regulatory challenges.
Max India shares rose 8.4% to Rs 492.75 on the Bombay Stock Exchange on Tuesday.