New York Life Insurance picks up 22.51% in Max Ventures for $17.8 mn
New York Life Insurance Company is acquiring a significant minority stake in Max Ventures and Industries Ltd (MaxVIL), the newest entity in the Max Group that was formed after the restructuring of Max India in 2016.
As part of the deal, a subsidiary of New York Life Insurance Company will acquire a 22.51% equity stake in MaxVIL at an offer price of Rs 78 per share, aggregating to Rs 121 crore on a diluted basis. Following the transaction, the subsidiary will be entitled to one nominee director on the MaxVIL board, said a statement from the acquiree firm.
Sahil Vachani, managing director and CEO of MaxVIL, said the funds will be used to invest in the company's focus areas, including manufacturing, real estate development and education, and will provide intellectual and financial capital to promising and proven early-stage organisations.
MaxVIL also proposed share warrants of 4.76% of the post-issue share capital to the promoter group for Rs 26.9 crore at Rs 78 per warrant, which will be convertible within 18 months, taking the shareholding of the promoter group in MaxVIL to around 38.02% on a fully diluted basis. The current promoter shareholding in MaxVIL is 45.06%.
Analjit Singh, founder & chairman emeritus of the Max Group and chairman of MaxVIL, said, “Max has a long-standing relationship with New York Life. The company was our first major partner when Max was reinvented as a service-oriented company in 2001. Hence it is very special to have them at the take-off stage of MaxVIL to continue and grow our valuable relationship with New York Life.”
The Max Group comprises three holding companies, namely Max Financial Services, Max India and Max Ventures & Industries.
In 2001, New York Life and the Max Group partnered to set up Max New York Life. In 2012, New York Life sold its 26% stake in Max New York Life to Mitsui Sumitomo Insurance Co. Ltd., after which the life insurance company was renamed Max Life. In August 2016, Max and HDFC froze a deal to merge their life insurance arms to create the largest private life insurer in the country.
At present, MaxVIL has four business verticals, Max Speciality Films (Manufacturing), Max Estates (Real Estate), Max Learning (Education) and Max I (special purpose vehicle). With a market capitalisation of Rs 345 crore, the company counts International Finance Corporation (IFC) and Reliance Mutual Fund among its shareholders.
New York Life is the largest mutual life insurance company in the US, with more than $500 billion under management. In FY16, the group recorded consolidated revenues of Rs 14,237 crore and has a total customer base of 9 million, nearly 240 offices spread across India with an employee base of 22,500.
The group’s investor base includes marquee global financial institutions such as Goldman Sachs, KKR, IFC Washington, Fidelity, Wasatch, Ward Ferry, Nomura, New York Life and Invesco.
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