Axis Bank & Max Financial to form 30:70 JV in Max Life

The board of directors of Axis Bank has approved entering into an agreement with Max Financial Services Ltd (MFSL) to acquire 29 per cent stake in Max Life Insurance Company Ltd (Max Life). As banks are allowed to engage in insurance, this stake acquisition will strengthen the bank’s position in life insurance industry.

In this regards, Axis Bank and MFSL announced the signing of definitive agreements to become joint venture partners in Max Life. Axis Bank will hold 30 per cent stake in Max Life, post transaction closure. The joint venture arrangement will significantly improve Max Life’s competitive position vis-a-vis its competitors, including other large bank-owned private life insurers.

MFSL presently holds 72.5 per cent stake in Max Life and Mitsui Sumitomo Insurance (MSI) owns 25.5 per cent stake. Axis Bank already has a minor stake in the life insurer. The aforesaid transaction with Axis Bank follows the ongoing swapping by MSI of 20.6 per cent stake that it holds in Max Life with 21.9 per cent stake in MFS. The latter also plans to purchase MSI’s balance stake in Max Life. Post completion of the series of transactions, Max Life will become 70:30 joint-venture between MFS and Axis Bank. The proposed transactions are subject to the approval of requisite corporate and regulatory authorities (including IRDAI, RBI & CCI).

On Tuesday, the stock of Axis Bank jumped 4.9 per cent to Rs 448.50 from its previous close of Rs 427.30. Also, the stock of Max Financial surged 8.8 per cent to Rs 492.35 from its previous close of Rs 452.55 on BSE.