The Indian private lender signed revised agreements with Max Financial following Reserve Bank of India’s advice
Axis Bank to indirectly acquire 19% stake in Max Life Insurance. (Credit: Gerd Altmann from Pixabay)
Axis Bank has entered into revised agreements with Max Financial alongside three of its subsidiaries to acquire a stake of up to 19.002% in Indian life insurer Max Life Insurance from the latter.
The financial terms of the deal were not revealed by the parties.
In August 2020, Axis Bank signed a revised deal to directly acquire 17.002% in the life insurance firm. However, the Reserve Bank of India did not consider the application filed by the private banking group in this connection.
The bank said: “Axis Bank has been advised to be guided by Para 5(b) of Master Direction- Reserve Bank of India (Financial Services provided by Banks) Directions, 2016 dated May 26, 2016 as updated from time to time.”
How Axis Bank plans to indirectly acquire the 19% stake in Max Life
In compliance with Para 5 (b), the Indian private lender will acquire up to a stake of 9.002% in Max Life, while Axis Capital and Axis Securities will jointly acquire up to a stake of 3%.
Another subsidiary of Axis Bank, namely Axis Entities, will hold a right to acquire an additional stake of up to 7% in the life insurance company in one or more tranches, in compliance with existing laws and regulations.
As a result of the revised agreements, Axis Bank’s total stake in the life insurer will stay within the limits as required under the applicable laws and regulations.
The revised agreements will replace the previous agreements signed by Axis Bank and Max Financial.
The closing of the deal under the revised structure is subject to receipt of regulatory approvals and meeting of preceding conditions.
Originally, in April 2020, the parties signed a deal to allow Axis Bank to acquire an additional stake of 29% in Max Life to make the latter a 30:70 joint venture with Max Financial Services.
In March 2020, Japan-based Mitsui Sumitomo Insurance, which has a 25.5% stake in the life insurance firm, agreed to swap 20.57% of the stake for a 21.87% stake in Max Financial Services. Besides, the Japanese group agreed to divest the remaining part to Max Financial Services to quit the life insurance business.