Axis Bank on Tuesday said that its board has approved purchase of an additional 29 per cent stake in Max Life Insurance. The total stake of Axis Bank in Max Life Insurance will increase to 30 per cent post the deal. Max Life will become a 70:30 joint-venture between Max Financial Services and Axis Bank after completion of the series of transactions, Axis Bank said in an exchange filing. Max Financial Services currently owns a 72.5 per cent stake in Max Life and Mitsui Sumitomo Insurance (MSI) holds 25.5 per cent stake. Axis Bank already had a minor stake in the life insurer.
"The Board of Directors at its meeting held on Monday, 27th April 2020, has approved entering into an agreement with Max Financial Services Limited (MFSL) to acquire 29% stake in Max Life Insurance Company Limited. The Bank will acquire shares from Max Financial Services and will sign a Shareholders' Agreement and a Share Purchase Agreement in relation to the same," Axis Bank added.
However, the bank didn't disclose the deal amount. The purchase price would be decided on basis of the valuation of Max Life "conducted as per Rule 11UA read with Rule 11UAA of the Income-tax Rules, 1962 on the date of share purchase (and) percentage of shareholding/control acquired and/or number of shares to be acquired; 55,64,94,102 shares representing 29% stake in Max Life Insurance Company Ltd." Some media reports have estimated the deal amount at Rs 1,600 crore. Axis Bank will announce its Q4FY20 results later in the day.
Axis Bank is the third largest private bank and Max Life is the fourth largest private life insurer in India. "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," Amitabh Chaudhry, MD and CEO, Axis Bank, said.
In 2019, Max Life Insurance posted a turnover of Rs 19,987 crore. Shares of Axis Bank were trading at Rs 444.45, up 17.15 points, or 4.01 per cent on BSE at the time of reporting.