Max India to raise Rs500 crore equity funds to prop up MNYL operations

Hospital operator and life insurer Max India Ltd said on Friday that the company plans to raise equity funds of about Rs500 crore in the next six months to part finance its planned investments in its insurance subsidiary - Max New York Life (MNYL) - for the current fiscal.

The company had earlier planned to raise about Rs1,000 crore this financial year to support MYNL's business. But now with the foreign direct investment (FDI) limit increase in insurance sector looking imminent, the company has scaled down the capital raising plans.

Currently, MNYL is capitalised at Rs 1,782 crore. Indications are that Max India would pump in about Rs700 crore in MNYL in 2009-10.

"We plan to raise another Rs500 crore capital through equity route to fund business growth in our insurance subsidiary. It could be through Qualified Institutional Placement (QIP) route or other private placement. The method has not been finalised as yet," Analjit Singh, chairman and managing director of Max India, stated this at a press conference yesterday.

This announcement comes on the heels of International Finance Corporation (IFC) investing Rs 150 crore in Max India through preferential allotment route.

The current joint venture agreement between Max India and New York Life provides for the latter to raise its stake in Max New York Life to 49 per cent once the necessary legal framework is in place.