Axis Bank to pick up 29% stake in Max Life Insurance

Max Life to become a 70:30 joint venture between Max Financial and Axis Bank

Axis-Bank Currently, Max Financial holds 72.5% stake in Max Life and Japan’s Mitsui Sumitomo Insurance owns 25.5%, while Axis Bank also has a minority stake

India’s third largest private sector lender, Axis Bank, is acquiring a 29 per cent stake in Max Life Insurance Company. The deal will take Axis Bank’s stake in Max Life to 30 per cent and the country’s fourth largest private sector life insurance company will now become a 70:30 joint venture between Max Financial Services and Axis Bank.

Currently, Max Financial holds 72.5 per cent stake in Max Life and Japan’s Mitsui Sumitomo Insurance (MSI) owns 25.5 per cent stake. Axis Bank also has a minority stake.

The deal will involve a series of transactions, which will see MSI swapping 20.6 per cent stake  in Max Life with a 21.9 per cent stake in Max Financial Services. Max Financial also plans to purchase MSI’s balance stake in Max Life. Once these transactions are complete, Max Life will become a 70:30 JV between Max Financial and Axis Bank and the latter's name will be included in Max Life’s tagline.

Axis Bank, Max Life and Max Financial had signed a confidentiality and exclusivity agreement  on February 20, 2020 to explore the possibility of a long-term strategic partnership between Axis Bank and Max Life.

The transaction, which was approved late on Monday, will allow Axis to deepen its working relationship leading to better integrated teams and infrastructure and a superior alignment in approach, said Amitabh Chaudhry, MD and CEO of Axis Bank.

“We continue to believe in the long-term prospects of India’s under penetrated life insurance space, current environment notwithstanding,” he said.

Interestingly, Max Life and HDFC Life were in talks for a merger in 2016 and Amitabh Chaudhry was heading HDFC Life at the time. That deal, however, did not go through due to regulatory issues.

Analjit Singh, the founder and chairman of Max Group, said the deal with Axis Bank will help Max Life become an even more formidable player in the Indian life insurance space.

“I believe that in Axis, we have found an exceptional partner and we have conviction that this will make Max Life fundamentally stronger, better performing and will bring stability to the franchise,” he said.

The deal between Axis and Max is expected to close in 6-9 months. Once the deal is complete, Axis Bank will have the right to nominate three directors and Max Financial will have to right to nominate four directors on the Max Life Board.

Big financial institutions such as State Bank of India, HDFC and Kotak Mahindra Bank already have large stakes in insurance companies. The deal with Max Life will help Axis Bank get a toe hold in the insurance industry, which is significantly under penetrated in India, but is expected to grow to $250 billion by 2025, according to CII.

On Tuesday, Axis Bank shares were up 3.7 per cent at Rs 443.25. Max Financial rose 5.3 per cent to Rs 476.45.

India’s third largest private sector lender, Axis Bank, is acquiring a 29 per cent stake in Max Life Insurance Company. The deal will take Axis Bank’s stake in Max Life to 30 per cent and the country’s fourth largest private sector life insurance company will now become a 70:30 joint venture between Max Financial Services and Axis Bank.

Currently, Max Financial holds 72.5 per cent stake in Max Life and Japan’s Mitsui Sumitomo Insurance (MSI) owns 25.5 per cent stake. Axis Bank also has a minority stake.

The deal will involve a series of transactions, which will see MSI swapping 20.6 per cent stake  in Max Life with a 21.9 per cent stake in Max Financial Services. Max Financial also plans to purchase MSI’s balance stake in Max Life. Once these transactions are complete, Max Life will become a 70:30 JV between Max Financial and Axis Bank and the latter's name will be included in Max Life’s tagline.

Axis Bank, Max Life and Max Financial had signed a confidentiality and exclusivity agreement  on February 20, 2020 to explore the possibility of a long-term strategic partnership between Axis Bank and Max Life.

The transaction, which was approved late on Monday, will allow Axis to deepen its working relationship leading to better integrated teams and infrastructure and a superior alignment in approach, said Amitabh Chaudhry, MD and CEO of Axis Bank.

“We continue to believe in the long-term prospects of India’s under penetrated life insurance space, current environment notwithstanding,” he said.

Interestingly, Max Life and HDFC Life were in talks for a merger in 2016 and Amitabh Chaudhry was heading HDFC Life at the time. That deal, however, did not go through due to regulatory issues.

Analjit Singh, the founder and chairman of Max Group, said the deal with Axis Bank will help Max Life become an even more formidable player in the Indian life insurance space.

“I believe that in Axis, we have found an exceptional partner and we have conviction that this will make Max Life fundamentally stronger, better performing and will bring stability to the franchise,” he said.

The deal between Axis and Max is expected to close in 6-9 months. Once the deal is complete, Axis Bank will have the right to nominate three directors and Max Financial will have to right to nominate four directors on the Max Life Board.

Big financial institutions such as State Bank of India, HDFC and Kotak Mahindra Bank already have large stakes in insurance companies. The deal with Max Life will help Axis Bank get a toe hold in the insurance industry, which is significantly under penetrated in India, but is expected to grow to $250 billion by 2025, according to CII.

On Tuesday, Axis Bank shares were up 3.7 per cent at Rs 443.25. Max Financial rose 5.3 per cent to Rs 476.45.