Axis Bank enters into definitive agreement to become JV partner in Max Life

NEW DELHI: Axis Bank on Tuesday entered into a definitive agreement with Max Financial Services Ltd to become a joint venture partner in Max Life Insurance Company Ltd, a pure play insurance player.The move will make Axis Bank, the third-largest private sector bank, a significant stakeholder in a life insurance venture and will allow it to participate in its long term capital appreciation.On completion of the transaction, the bank will have 30% equity stake in Max Life and the balance 70% will be retained by Max Financial. The boards of Axis Bank, Max Financial and Max Life approved the transaction late on April 27. ET was the first to report the story on its edition dated April 28.This is an outcome of the interse discussions after the three companies signed a confidentiality and exclusivity arrangement on February 20 to explore the possibility of a long-term strategic partnership.Under the agreement, Max Life will include Axis Bank logo in its brand tag line to demonstrate the close knit partnership. Axis Bank has decided to buy 55.65 crore equity shares, representing 29% in Max Life Insurance. Sources said the consideration for proposed transaction is about ?1,600 crore, priced at the book value of Max Life. Axis Bank will have right to appoint three nominee directors and Max Financial will have right to appoint four nominee directors on the board of Max Life Insurance Company. In addition, the bank will have the right to appoint one nominee director on the board of Max Financial Services limited.The joint venture arrangement will significantly improve Max Life’s competitive position vis a vis its competitors, including the other large bank-owned private life insurers, Max Financial said in a statement. Max Financial Services holds a 72.5% in Max Life and Mitsui Sumitomo Insurance (MSI) owns 25.5%. Axis Bank also has a minor stake of about 1 % in the life insurer.75441976The share purchase deal of Axis Bank follows the ongoing share swapping by MSI of 20.6% stake that it holds in Max Life with a 21.9% stake in MFS. MFS also plans to purchase MSI’s balance stake in Max Life. The proposed transactions are subject to approval of requisite corporate and regulatory authorities (including IRDAI, RBI and CCI).Amitabh Chaudhry, chief executive, Axis Bank, said, “We see this joint venture creating immense value for stakeholders.”Analjit Singh, founder and chairman, Max Group, said, “This move is an emphatic signal that Max Life will become an even more formidable player in the Indian life insurance space.”

from Economic Times https://ift.tt/3cSlZTe
via IFTTT