Mumbai: Analjit Singh-promoted Max India Ltd on Monday said it will sell 23% of its stake in health insurer Max Bupa Health Insurance Co. Ltd to British partner Bupa Plc. for 191 crore.

Once the transaction is complete, Max India’s holding in the insurance firm will fall from 74% to 51%, while Bupa’s stake will rise from 26% to 49%.

The deal, which needs approval from the Foreign Investment Promotion Board and the Insurance Regulatory and Development Authority of India (Irdai), will be the largest in terms of stake size in the general insurance space, after government permitted foreign firms to hold 49% in insurance firms, up from 26% earlier.

Max Bupa had first spoken of its partner’s intent to increase stake in January.

The insurance laws amendment ordinance 2014, which proposed to raise the foreign direct investment (FDI) limit in insurance to 49%, was cleared by Parliament during this year’s budget session.

Max Bupa is the seventh-largest private health insurer in India, with a customer base of at least 2 million.

The deal took longer than expected because there were “certain ambiguities" in the new laws regarding ownership and control after the FDI limit hike, according to the head of a private life insurer.

“The government clarified on the new FDI norms in this regard only a couple of months back. We will soon see more such deals in the insurance space," he said on condition of anonymity.

Further, following a board meeting, Max India said in an exchange notice that it will contribute 150 crore of capital in Max Healthcare Institute Ltd., an equal joint venture between Max India and Life Healthcare, South Africa.

The infusion is intended to enable Max Healthcare to acquire a controlling stake of 51% in Saket City Hospitals Pvt. Ltd., the company said.

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