Axis Bank has slashed the stake purchase plan in Max Life Insurance from 209 per cent to 17 per cent in a revised deal. The private lender, which is the biggest banking channel partner of insurance products for Max Life, made changes to the last month's deal after correspondence from the insurance regulator, the Insurance Regulator and Development Authority of India (IRDAI).
The bank in July said it signed a definitive agreement with Max Financial Services Limited for the sale of 29.002 per cent stake in Max Life Insurance Company Limited, a material subsidiary, to Axis Bank.
"We would like to inform you that following recent developments, Axis Bank now proposes to acquire 17.002% of the equity share capital of Max Life, resulting in total ownership of 18.0% post the transaction. The parties have executed the definitive agreements. Axis Bank and Max Life will shortly approach the respective regulatory authorities, with revised applications for their consideration and approval. The transaction is subject to regulatory approvals," Axis Bank said.
Max Financial holds 72.5 per cent stake in Max Life and Japan-based Mitsu Sumitomo Insurance holds 25.5 per cent stake. After the new deal, Max Life will become 82:18 joint venture between MFS and Axis Bank.
Max Life had made an attempt to merge with HDFC Life in 2017 but they did not receive regulatory approvals reportedly due to the complexity of the deal. Interestingly, the deal was brokered by the then HDFC Life CEO Amitabh Chaudhry, who is now the CEO of Axis Bank. Following failure of the deal, Max Group made several attempts to sell part of its stake but was not successful.
Axis Bank is the third largest private bank and Max Life is the fourth largest private life insurer in India; it posted a turnover of Rs 19,987 crore in 2019. Meanwhile, shares of Axis Bank were trading at Rs 455, up 9 points, or 2.02 per cent on the NSE at the time of reporting.