Axis inks pact with Max Fin and its unit for likely strategic deal

Axis Bank signed an agreement with Max Financial Services Ltd and Max Life Insurance Co. Ltd as India’s fourth-largest private sector lender looks to cement a closer association with the insurer that is said to involve enlarging its stake.

“Axis Bank, Max Financial Services Ltd (MFS) and its subsidiary Max Life Insurance Co. Ltd (Max Life) today signed a confidentiality and exclusivity arrangement to explore the possibility of Axis Bank entering into a long-term strategic partnership with Max Life,” Max Financial said in an announcement.

Max Financial rose as much as 15.7 per cent during Thursday trade to a 52-week high of ₹597.45 before closing at ₹565.05, up 9.4 per cent.



A person familiar with the development told ET that India’s fourth-largest private sector bank will likely acquire a one-fifth stake in Max Life. “Axis is likely to infuse about ₹2,000 crore into Max Life for more than 20 per cent stake,” he said. “Max Financial Services will continue to be a dominant shareholder with significant majority in the Max Life Insurance.”

This will result in the proportionate dilution of existing shareholders of Max Life.

“The successful completion of the proposed transaction is expected to create significant value for all stakeholders,” said Axis Bank managing director and CEO Amitabh Chaudhry.

Max Life is currently the largest nonbank-owned private life insurer in India. Max Financial Services holds a 72.5 per cent stake in Max Life while Mitsui Sumitomo Insurance and Axis Bank hold 25.5 per cent and 2.0 per cent, respectively. ET had reported the development on Thursday.

Max Group founder Analjit Singh won’t be raising any resources through the proposed transaction, sources said.

“At the Bank, we constantly keep assessing various strategic opportunities and we see a potential for greater participation in the under-penetrated life insurance space,” Chaudhry said. “We have had a long standing bancassurance relationship with Max Life and the ongoing discussions are a step further to deepen and strengthen this strategic partnership.”

Max Group’s Singh said a deal would give a boost to the overall life insurance sector.

“The strategic interest of Axis Bank in Max Life will lead to the much-awaited permanence and allow both companies to work towards an enduring future for policyholders and other stakeholders,” he said.

“The partnership has already set multiple benchmarks in the life insurance industry for policy sales, customer retention, rigorous training to ensure need-based policy writing, technology integration etc,” Singh said.