Announced in April 2020, the transaction is to result in Max Life Insurance becoming a 70:30 joint venture (JV) between Max Financial and Axis Bank
Max Financial Services and Axis Bank have agreed to modify their previously announced deal under which the latter would go on to acquire an additional 29% stake in Max Life Insurance.
The amendment to the deal is being made following the correspondence received from India’s Insurance Regulatory and Development Authority (IRDAI) asking the parties to make certain changes to the value creation options.
Besides the regulator has also asked the two companies to explore other alternate mechanisms for their transaction subject to receipt of regulatory approvals, and as may be allowed under applicable law.
Announced in April 2020, the transaction is to result in the life insurance firm becoming a 70:30 joint venture (JV) between Max Financial and Axis Bank. Currently, Max Financial Services has a 72.5% stake in the life insurance company, while Mitsui Sumitomo Insurance has a 25.5% stake.
The deal values Max Life Insurance at $760m
Axis Bank, which is a private sector banking group in India, currently has a stake of around 1% in the Indian life insurance company, and is looking to acquire another 29% stake for INR16bn ($210m), reported livemint. The deal would value the Indian life insurance company at nearly INR56.67bn ($760m).
The deal with Axis Bank for Max Financial Services will follow swapping by Mitsui Sumitomo Insurance of a 20.6% stake that it holds in the life insurance firm, with a 21.9% stake in the company, reported The Hindu BusinessLine.
Max Financial also intends to acquire Mitsui Sumitomo Insurance’s remaining stake in Max Life Insurance to enable the creation of the 70:30 life insurance joint venture with Axis Bank.
The increase of stake in the life insurance firm is said to enable Axis Bank to gain a solid presence in the Indian insurance industry. On the other hand, Max Financial Services has been looking for another partner in the life insurance company.