Axis Bank to buy 29% stake in Max Life Insurance

Mitsui to swap insurance arm stake for that in Max Financial

Private sector lender Axis Bank has signed a definitive agreement with Max Financial Services Limited (MFS) to buy 29% stake in Max Life Insurance Company in an all-cash deal, the bank said in a statement. Axis Bank, which already holds 1% stake in the insurer, will hold 30% after the deal is closed.

The two parties had begun discussions on the deal in February.

Max Financial Services currently owns a 72.5% stake in Max Life and Mitsui Sumitomo Insurance (MSI) holds 25.5%. The transaction with Axis Bank will follow swapping by MSI of 20.6% stake that it holds in Max Life, with a 21.9% stake in MFS. Max Financial also plans to purchase MSI’s balance stake in Max Life. Post completion of the series of transactions, Max Life will become a 70:30 joint-venture between Max Financial and Axis Bank.

According to the agreement, Max Financial will have the right to nominate four directors to the board of Max Life and Axis Bank shall be eligible to name three directors.

“One nominee director of the promoter group on the board of MFSL shall be a person identified by Axis,” the bank said. The transaction is expected to be completed in 6 to 9 months. According to the agreement, Axis Bank will sell 30% stake in Max Life at ₹294 per share if ‘value is not created’ in 63 months from the time of closing the deal.

Max Life will include the Axis Bank logo in its brand tagline following the deal.

“We continue to believe in the long-term prospects of India’s under-penetrated life insurance space, the current environment notwithstanding. 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.” Amitabh Chaudhry, MD and CEO, Axis Bank, said.

Analjit Singh, founder and chairman, Max Group, said, “This move is an emphatic signal that Max Life will become an even more formidable player in the Indian life insurance space.” This is Mr. Singh’s second attempt to sell stake in the insurance firm. In 2017, Max Life had been in talks with HDFC Life to sell stake but the deal fell through after the insurance regulator rejected the proposed structure of the deal and an alternative structure could not be worked out.

Incidentally, Mr. Chaudhry was the MD and CEO of HDFC Life when the deal with Max was contemplated.

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Printable version | May 31, 2020 3:43:45 AM |

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