Max India plans to raise Rs 400 cr

NEW DELHI: Insurance and healthcare company Max India plans to raise Rs 400 crore through the QIP route, scrapping its earlier decision to raise up to Rs 650 crorevia a rights issue. A decision to this effect 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. When contacted, the company spokesman declined to comment.

Max India needs fund to expand the group���s insurance company Max New York Life Insurance (MNYL), a 74:26 joint venture between Max India and US-based New York Life. MNYL contributes about three-fourths to the group���s total revenues. Indian law requires insurance companies to keep aside funds as security money, also called solvency margin.

A person familiar with 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.