Mumbai: The country’s third-largest private banker Axis Bank is set to pick up 30 per cent stake in Max Life in a stock deal for an undisclosed amount.
The bank has signed a definitive agreement with Max Financial Services Limited (MFS), the majority shareholder in Max Life, to increase its stake and become a joint venture partner in the insurer.
Post the completion of the series of transactions, Max Life will become a 70:30 joint venture between MFS and Axis Bank.
The proposed transactions are subject to approval of requisite corporate and regulatory authorities (including IRDAI, RBI and CCI), a company statement said.
The development will result in a mutually beneficial and enduring relationship between Axis Bank and Max Life and bring the stability of a long-term partnership to India’s fourth-largest private life insurance franchise.
The joint venture arrangement will significantly improve Max Life’s competitive position vis-a-vis its competitors, including the other large bank-owned private life insurers, the statement added.
The Boards of Axis Bank, MFS and Max Life approved the transaction late on April 27, though the deal was under discussion since the three companies signed a confidentiality and exclusivity arrangement on February 20, 2020 to explore the possibility of a long-term strategic partnership between Axis Bank and Max Life.
Max Financial Services presently holds a 72.5% stake in Max Life while Mitsui Sumitomo Insurance (MSI) owns 25.5% stake. Axis Bank also has a minor stake in the life insurer.
The aforesaid transaction with Axis Bank follows the ongoing swapping by MSI of 20.6% stake it holds in Max Life with a 21.9% stake in MFS. MFS also plans to purchase MSI’s balance stake in Max Life.
Post the completion of the deal, Max Life’s tagline will include Axis Bank’s name.
Axis Bank is the third-largest private bank and Max Life is the fourth-largest private life insurer in India.
The two companies have had a successful business relationship for over a decade, providing long-term saving and protection products to over 19 lakh customers.
The total premium generated through this relationship has aggregated to over Rs 38,000 crore.
Announcing the transaction, Amitabh Chaudhry, MD and CEO, Axis Bank, said: “We believe this transaction will allow us to deepen our working relationship, leading to better integrated teams and infrastructure and a superior alignment in our approach.”
Analjit Singh, Founder and Chairman, Max Group, said: “We at Max Group have had a long-standing record of successful joint ventures. We achieve this by choosing partners with complementary skills, a matching belief system and a shared vision for the future of the business. I believe that in Axis, we have found an exceptional partner and we have the conviction that this will make Max Life fundamentally stronger, better performing and will bring stability to the franchise.”