Axis Bank has signed a definitive agreement with Max Financial Services Limited (MFS) to buy a 29% stake in Max Life Insurance Company. Axis Bank, which already holds a 1% stake in the insurer, will hold 30% after the deal is closed.
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 deal, 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. Max Life will also include the Axis Bank’s logo in its brand tagline as a part of the deal.
Amitabh Chaudhry, MD, and CEO of Axis Bank said “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.”
While 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 a 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.
Now the thing remains to consider is the benefit which this deal can have on the consumers.