The deal, when completed, will see Max Financial holding 70% stake and Axis Bank owing 30% stake in the insurance firm
Axis Bank, India’s third largest private bank, announced that it will increase its stake in Max Life Insurance, the fourth largest private life insurer in the country, to 30%.
The bank already owns a minority stake in the life insurance firm. Max Financial Services and Mitsui Sumitomo Insurance (MSI) currently own 72.5% and 25.5% stake in Max Life, respectively.
Upon completion of the transaction, Axis Bank and Max Financial Services will become joint venture partners in the insurance company.
Axis Bank stated: “The development will result in a mutually beneficial and enduring relationship between Axis Bank and Max Life and bring the stability of a long term partnership to India’s fourth largest private life insurance franchise.”
The joint venture arrangement is expected to significantly improve Max Life’s competitive position against its competitors, including the other large bank owned private life insurers.
Max Life’s tag line will include Axis Bank’s name
In February, the three companies signed an arrangement to explore the possibility of a long-term strategic partnership between Axis Bank and Max Life.
Axis Bank’s deal to increase stake in the insurer follows the ongoing swapping by MSI of 20.6% stake that it holds in Max Life with a 21.9% stake in Max Financial Services.
In addition, Max Financial Services plans to purchase MSI’s balance stake in the insurance company.
The transaction, which subject to approval from regulatory authorities in India, is expected to be closed within six to nine months.
Axis Bank CEO and managing director Amitabh Chaudhry said: “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.”
To further enhance customer trust in the brand, Max Life’s tag line will include Axis Bank’s name.
Through their business partnership, Axis Bank and the insurance have offered saving and protection products to over 1.9 million customers over a decade.