Axis Bank is set to acquire 29 per cent stake in Max Life Insurance Company from Max Financial Services Limited (MFSL), the flagship listed company of Max Group, in order to strengthen its position in the life insurance industry. This stake purchase will take the bank's stake in the insurer to 30 per cent. Axis Bank expects the transaction to complete in six to nine months, subject to regulatory approvals.
The transaction is subject to approvals from Reserve Bank of India, Insurance Regulatory and Development Authority of India, and Competition Commission of India.
Mr. Amitabh Chaudhry, MD and CEO, Axis Bank, said, "We continue to believe in the long term prospects of India's under-penetrated life insurance space, current environment notwithstanding. We see this joint venture creating immense value for our stakeholders given our long standing, high performing partnership with Max Life. 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."
MFSL currently holds a 72.5 per cent stake in Max Life and Mitsui Sumitomo Insurance owns 25.5 per cent stake. Post completion of the transaction, Max Life will become 70:30 joint-venture between MFSL and Axis Bank. MFSL will have the right to nominate four directors and Axis Bank will nominate three directors on the Board of Max Life.
Axis Bank is the third largest private bank and Max Life is the fourth largest private life insurer in India.
The deal will place Axis Bank in the league of other leading private and public sector lenders such as HDFC Group, ICICI Bank, Kotak Mahindra Bank and State Bank of India, which have significant stakes in life insurance companies.
At 11:10 am, Axis Bank shares were quoting higher by 3.6 per cent at Rs 443 and Max Financial Services Limited shares had gained 6.2 per cent at Rs 480 on the BSE. Axis Bank is scheduled to announce its Q4 numbers later in the day.