Axis Bank entities close deal with Max Life Insurance, become co-promoters

Axis stake at 12.99%, will nominate three directors to Max Life's board

Private sector lender Axis Bank and its subsidiaries Axis Capital Limited and Axis Securities have completed acquiring a stake in Max Life Insurance and post of the completion of the transaction have become co-promoter of the life insurer with 12.99 per cent stake.

With this, Max Life’s board will be recast with three nominees from Axis entities (Axis Bank, Axis Capital, and Axis Securities together are called Axis entities). It is also important to note that Axis entities can up their stake in the life insurance company by another 7 per cent, for which they would require further regulatory approvals.

The transaction was completed after the insurance regulator’s approval in February. It took more than a year for the deal to get completed as Axis Bank had first announced its intention of acquiring a stake and becoming a strategic partner in Max Life back in February 2020. However, the deal ran into trouble with both the banking regulator and the insurance regulator as a result of which the private sector lender had to change the deal a couple of times.

“We have the opportunity now to shape the future of the industry through continued leadership in products, technology, and customer-centricity”, said Amitabh Chaudhry, Managing Director & CEO, Axis Bank.

Axis Bank has been the bancassurance partner of Max Life for a long time now. Through the bank’s branches and sales networks, Max Life sold long-term saving and protection products to around 2 million customers for a premium income of around Rs 40,000 crore.

“Both companies have invested extensively in product and need-based sales training, thereby leading to a consistent increase in productivity”, Axis Bank in a release said.

Max Life is the fourth largest private sector life insurance company, with an asset under management of Rs 84, 724 crore. In the last four years (FY 16 –20), its Individual Adjusted New Sales registered a compounded annual growth rate (CAGR) of 18 per cent.

The deal was structured in a way wherein, Axis Bank would acquire 9 per cent stake in the life insurance company while Axis Capital and Axis Securities would acquire another 3 per cent in the company in the first leg of the transaction. Furthermore, Axis entities – Axis Capital & Axis Securities – will have the right to acquire another 7 per cent in the life insurance company, in or more tranches. And, they do intend to acquire more stake in the company in the coming years.

Max Financial Services is the holding company of the private sector life insurer Max Life Insurance. Max Financial Services swapped its stake for Mitsui Sumitomo’s stake in the life insurance company. The transaction entailed swapping Mitsui Sumitomo's 20.6 per cent stake in Max Life Insurance with 21.9 per cent stake in MFS, which resulted in MFS holding more than 93 per cent stake in the life insurance company. Before the share swap, MFS held 72.5 per cent stake in Max Life and MSI owned 25.5 per cent stake in the life insurance firm.