On Monday, the country’s third-largest private sector lender, Axis Bank announced that it would acquire 17% stake in Max Life Insurance, instead of 29% as per the deal decided back in April. After the questions raised by the Insurance Regulatory and Development Authority of India (Irdai), the deal has been restructured.
In April, the deal was announced that Axis Bank will raise its stake in Max Life Insurance from 1% to 30% for Rs 1,592 crore at Rs 28.61 apiece as it will elevate their bancassurance partnership in the joint venture. Analjit Singh, promoter of Max Financial holds 73.5% in Max Life, Mitsui Sumitomo Insurance about 25.5% and the remaining 1% by Axis Bank.
The deal was structured in a way that Mitsui Sumitomo Insurance would hold a stake of 21.87% in Max Financial Services in an exchange of 20.57% stake of Max Life through a share swap transaction and then, Max Financial Services and Max Financial Insurance would take 1% stake in Max Life from Axis. Later, Max Financial Services would sell 29% stake in Max Life and then finally Max Financial Services would acquire balance 5.17% stake from Mitsui Sumitomo Insurance.
The Axis Bank-Max Life Insurance Joint Venture is expected to help Max Life in its distribution, like other rivals including SBI Life Insurance, HDFC Life Insurance and ICICI Prudential Life who have their JV partners as Banks or NBFCs.