Last month, a deal was signed to enable Axis Bank to take an additional stake of 29% in Max Life Insurance to make it a 30:70 joint venture with Max Financial Services
Axis Bank and Max Financial Services have again revised their previously announced deal to enable the latter to acquire a reduced stake of 17.002% in Max Life Insurance, an Indian life insurer.
Financial terms of the deal were not disclosed by the parties.
Last month, the parties signed a deal to enable Axis Bank to take an additional stake of 29% in the life insurer to make it a 30:70 joint venture with Max Financial Services.
As per the new terms, Axis Bank will have a total stake of 18% in the insurer, while Max Financial Services will hold on to the remaining 72% stake. The closing of the deal will be subject to regulatory approvals.
Axis Bank, in a filing to the Bombay Stock Exchange (BSE), stated: “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
Currently, Mitsui Sumitomo Insurance holds a 25.5% stake in Max Life Insurance. In March 2020, the company said that it will swap 20.57% of the stake for a 21.87% stake in Max Financial Services, besides agreeing to sell the remaining part to the latter to quit the life insurance business.
The parties had signed definitive agreements in this regard.
Axis Bank wanted to increase its stake in Max Life Insurance to 30%
It was in April 2020 that Axis Bank agreed to buy a stake of 29% in the life insurance firm. In June 2020, the Indian Insurance Regulatory and Development Authority (IRDAI) sought clarifications from Max Financial Services about certain clauses in the agreement, reported The Economic Times.
The following month, in July, Axis Bank and Max Financial Services agreed to amend their deal after bringing in certain changes to the value creation options as per the correspondence from IRDAI.
Subsequently, the Reserve Bank of India (RBI) raised concerns with Axis Bank regarding the spillover risks for a bank getting into an insurance business, as per the publication.