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Axis Bank, along with Max Financial Services Limited and its subsidiary Max Life Insurance, have signed a confidentiality and exclusivity arrangement that will allow the private sector lender to explore the possibility of entering into a long-term strategic partnership with the life insurer.
“The transaction will be subject to applicable regulatory approvals, satisfactory completion of due diligence, execution of definitive documentation, and satisfaction of other conditions, including the necessary corporate approvals,” Axis Bank said in a statement on Thursday.
While the statement did not disclose the contours of the expected partnership, it could possibly include Axis Bank picking up more stake in Max Life Insurance from Max Financial Services.
The arrangement has a three-month timeline. This is expected to give the private sector lender a greater foothold in the insurance sector, while Max Financial Services has been scouting for another shareholder for Max Life.
Max Life is currently the largest non-bank-owned private life insurer in India. Max Financial Services holds a 72.5 per cent stake in Max Life, while Mitsui Sumitomo Insurance holds 25.5 per cent equity. Axis Bank owns 2 per cent stake in Max Life. “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.
“The successful completion of the proposed transaction is expected to create significant value for all stakeholders,” said Amitabh Chaudhry, MD and CEO, Axis Bank.
Bancassurace deal
Axis Bank and Max Life have had a bancassurace (banca) arrangement for nearly a decade, with the new premium generated estimated at more than ₹12,000 crore.
Analjit Singh, Founder and Chairman, Max Group, said: “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. We also believe that the potential transaction will provide a fillip to the life insurance sector overall.”
There were earlier reports of talks between Max Financial and Hero Corporate Services.
On Thursday, the shares of Max Financial Services ended 9.41 per cent higher on the BSE and closed at ₹565.05 apiece, while Axis Bank scrip closed 0.5 per cent higher and ended at ₹744.90 apiece.
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