Max India split to unlock insurance value

Analjit Singh-led Max India will split into three separate entities to unlock value in the insurance businesses. The decision comes after the recent hike in foreign direct investment limit in the insurance sector.

The company said the insurance Ordinance has created renewed investor interest in the life insurance sector.

The company's Board cleared a proposal to divide the Group into three different business verticals on Tuesday-Max Financial Services for life insurance, Max India Limited for health care, health insurance & allied businesses and Max Ventures and Industries Limited for manufacturing activities.

Besides, Max's clinical research business will be divested to a Canadian company for $1.5 million.

"The demerger will provide these businesses, which are currently in their growth and development phases, sharpened focus to fulfil their tremendous potential," Singh, the promoter and chairman, said. The appointed date for the demerger is April 1, 2015, and the demerger is expected to be completed within the next six to nine months.

Foreign partners Mitsui and Bupa have expressed interest in raising their stakes in the life insurance venture and health insurance company to 49 per cent.

Once the demerger scheme is effective, after due regulatory approvals, Max India's shareholders will retain one equity share of Rs 2 in Max Financial Services and additionally get one equity share of Rs 2 of Max India for every one equity share of Rs 2 each held in Max Financial Services.

Shareholders will get one equity share of Rs 10 each of Max Ventures and Industries for every five equity shares of Rs 2 each held in Max Financial Services.