Max India requires fund to expand the group’s insurance company, Max New York Life Insurance
Insurance and healthcare company, Max India is expected to raise around INR4 billion through the QIP route, scrapping its earlier decision to raise up to INR6.5 billion through a rights issue – reported Economic Times.
A decision is expected to be taken at the company’s board meeting scheduled to be held on Wednesday. The company, which posted consolidated revenue of over $1 billion in FY09, is likely to dilute 7-8% stake following the placement.
Max India requires fund to expand the group’s insurance company, Max New York Life Insurance (MNYL). Indian law requires insurance companies to keep aside funds as security money, also called solvency margin.
A source of the development, said: “The change in the funding strategy is in anticipation that the government will increase the foreign direct investment (FDI) in the sector to 49% from the current 26% by the end of this year. Max India can then sell 23% stake in the JV Company, thereby infusing additional funds.”