Axis Bank is looking to buy 6 per cent more stake in JV Max Life Insurance for ₹1,612 crore by way of preferential issue of 14.3 crore equity shares.

This will take Axis Bank’s shareholding in the insurer to 16.2 per cent and Axis Group’’s shareholding to 19 per cent from the current level of 13 per cent. On the other hand, JV partner and promoter Max Financial Services’ shareholding will fall to 81 per cent from 87 per cent.

The share issue will be at fair market value of ₹113.06, determined on the basis of DCF (discounted cash flow) methodology. The bank will retain the right to acquire an additional 0.98 per cent stake from Max Financial in the next 15 months.

The proposed transaction, expected to be completed in 4-6 months, is subject to approval of shareholder and regulators including IRDAI, PFRDA and CCI. The RBI has approved the proposed stake buy the entities informed the exchanges.

“The increase stake in Max Life by Axis Bank, has been long awaited and will lead to a more natural balanced ownership level considering the importance of the power of distribution through the Banca channel of Axis Bank,” Chairman Analjit Singh said.

Focus areas

Max Life will use the proceeds to support future growth ambitions, augment its capital position and improve solvency margins, with MD and CEO Prashant Tripathy saying that the additional investment will help strengthen the franchise, with a focus on driving new and strategic partnerships to unlock growth along with building momentum in the existing ones.

In April 2021, the Axis Bank and its subsidiaries Axis Securities and Axis Capital, had collectively acquired 12 per cent stake in Max Life by way of a secondary transfer from Max Financial. The sponsor family, including Singh, holds 10 per cent stake in the insurer. Other group shareholders include MSI, Ward ferry, New York Life, Capital, GIC, Baron, Vanguard, Jupiter, Blackrock, and the Asset Management Companies of DSP, Nippon, HDFC, ICICI Prudential, UTI, Motilal Oswal, Canara Robeco, Sundaram, Aditya Birla Sun Life, Mirae and Kotak. 

Following the share purchase, the board of Max Life will include 5 nominee directors of Axis Entities and 3 nominee directors of Max Financial. Further, Axis entities will have the final say on affirmative voting items (AVIs), and have the right to appoint the Chairman of Max Life.

The shares held by Axis will be subject to regulatory lock-ins and with transferability restrictions to certain identified persons.