Axis Bank is acquiring an additional 6.23 per cent in Max Life Insurance Company through a preferential allotment of Rs 1,612 crore.

In 2021, Axis Bank and its subsidiaries — Axis Securities and Axis Capital — had entered into definitive agreements with Max Financial Services Ltd, the parent of Max Life, to acquire a 20 per cent stake in the insurer.

The Axis entities had collectively acquired 12.99 per cent of Max Life.

Earlier this year, Axis Bank had entered into a revised agreement with Max Financial.

It was decided that the valuation for the right to acquire nearly 7 per cent more equity in Max Life would be at fair market value using discounted cash flows.

This revision was done after the guidance received by Max Life from insurance regulator IRDAI. Discounted cash flow refers to the estimated value of an investment based on future cash flows.

In October 2022, the IRDAI had slapped Rs 3 crore and Rs 2 crore fines on Max Life Insurance and Axis Bank, respectively, for the violation of various provisions relating to the deal. Max Life was pulled up for violating IRDAI’s direction, misrepresentation to obtain approval and contravention of share transfer directions. Axis Bank was fined for making undue gains in the deal and violation of norms.

Axis Bank on Wednesday said the bank along with Axis Securities and Axis Capital have entered into agreements with Max Financial Services to acquire more stake in Max Life.

The board has approved a proposal which entailed the lender infusing Rs 1,612 crore in Max Life through preferential allotment.