Shares of Max Financial Services, on Thursday, were locked in 10 per cent upper circuit at Rs 938.65, also its record high, on the BSE, after the Insurance Regulatory and Development Authority of India (IRDAI) gave its approval for the acquisition of up to 12 per cent stake in Max Life Insurance (Max Life) by Axis Bank and its subsidiaries Axis Capital and Axis Securities (Axis Entities).
As per the proposed transaction, Axis Entities have the right to acquire up to 19 per cent stake in Max Life, of which, Axis Bank proposes to acquire up to 9 per cent, and Axis Capital Limited and Axis Securities Limited together propose to acquire up to 3 per cent of the share capital of Max Life in the first leg of the transaction.
In addition, Axis Entities have the right to acquire an additional stake of up to 7 per cent in Max Life, in one or more tranches, which they intend to acquire over the course of the next few years.
The IRDAI approval was an integral step in this long-awaited joint venture transaction which was first announced in April 2020.
Max Life is the fourth-largest private life insurer in India while Axis Bank is the third-largest private bank. The two companies have shared a successful business relationship for over a decade, providing long-term saving and protection products to nearly 20 lakh customers. The total premium generated through this relationship has aggregated to over Rs. 40,000 crore. Both companies have invested extensively in product and need-based sales training, thereby leading to consistent increase in productivity.
Max Financial Services (MSFL) is part of the leading business conglomerate — the Max Group. Focused on Life Insurance, MSFL owns and actively manages a 93.1 per cent stake in Max Life Insurance, India's largest non-bank, private life insurance company. MFSL earned revenue of Rs 18,242 crore in FY20.
Till 09:28 am, a combined 1.8 million equity shares had changed hands on MSFL counter and there were pending buy orders for 170,000 equity shares on the NSE and BSE, exchange data shows.
Meanwhile, shares of Axis Bank were up 3 per cent at Rs 773, after hitting a high of Rs 777 on the BSE in intra-day trade. In comparison, the S&P BSE Sensex was up 1.06 per cent at 51,306 points.