Diversified Max Group has sold a 13% stake in Max Life Insurance Company to Axis Bank, the country’s third-largest private sector lender, which will now be a co-promoter of the insurer.
The deal was completed more than a year after Max Financial Services and Axis Bank announced their intention to form a strategic partnership for the former insurance sector. Financial details were not disclosed.
Max Financial Services – Max Life’s holding company – has a 12.99% stake in the insurance company for Axis Bank and its subsidiaries – Axis Capital and Axis Securities Ltd, according to a filing. Axis units have now become co-promoters of Max Life.
“Max Life’s board closed the deal today,” Max Financial Services said in a filing on Tuesday. In February this year. Under the deal, Axis entities also have the right to acquire an additional stake of up to 7% in maximum life, in one or more installments, subject to regulatory approval. The three nominated directors of Axis entities will be part of Max Life’s board of directors.
For Max Group founder and chairman Analjit Singh, it is a long-awaited deal since in June 2016, he announced a deal with HDFC Life under a three-way merger. But it was closed after a year due to regulatory hurdles.
Interestingly, now Axis Bank chief Amitabh Chaudhary was at the helm of HDFC Life, when the proposed deal with Max collapsed.
Axis Bank is a large private sector lender that does not have an insurance branch. The bank was directly interested in acquiring more than 20% stake in Max Life, but the Reserve Bank reportedly is not comfortable in allowing banks to hold more than 20% stake in the cash insurance business.
Prashant Tripathi, managing director and CEO of Max Life, told PTI that the top management, including myself, would not change at the completion of the deal. The company will continue to be known as Max Life, but the tagline will change to ‘a joint venture between Max Group and Axis Bank’.
According to him, the lender is at liberty to take another 7% in the company, which can maternity within the next 24 months.
He declined to share the value of the deal, saying that it is not “a primary capital infusion, but a transaction between two promoter shareholders – Max Group and Axis Bank”.
Axis Bank Managing Director and CEO Amitabh Chaudhary said that the bank has been a long-term partner of Max Life and together they have contributed to deepening insurance penetration in India over the past decade.
“We believe this venture will increase the value for all stakeholders of Axis Bank and Max Life,” he said.
The bank has been with Max Life as a bancassurance partner for over a decade, under which long-term savings and preservation products have been delivered to nearly 2 million customers.
The total premium generated through this alliance is more than 40,000 crores, according to the release. The alliance contributed 24% to 84,724 crores by December 2020, accounting for 55% of its total sales.
Analjit Singh said the conclusion of the deal will further strengthen Max Life and will help accelerate a new growth path by combining the forces of India’s third largest private bank with the country’s fourth largest private life insurer.
“This closing marks a new phase of growth and stability for Max Life. Prashant Tripathi, managing director and CEO of the joint venture Max Life, said that by integrating the resources and benefits that the two players bring, enhances our brand in the eyes of our customers, business partners and investors.
The filing states that Max Life has recorded a 20% annual increase in its assets under management to ₹ 84,724 crore as on 31 December, more than doubling in less than four years.
In the last four years (FY16-20), its individually adjusted new sales recorded an annual growth rate of 18%. In the first 11 months of the last financial year, Max Life personally surpassed the top three private players with new sales growth of 14% year-over-year.
“With the conclusion of this deal between Max Life and Axis Bank, we are ready and equipped to integrate the synergy of the two players and initiate a relationship that positions Max Life as the top quarterile life insurer Will provide sustainable and profitable growth. ” Said Mohit Talwar, managing director of Max Financial Services.
According to Prashant Tripathi, managing director and CEO of Max Life, the company controls 10.8% of the life insurance market among private players and 6.4% of the overall industry, which is accounted for more than 70% by national insurance company LIC based on personal insurance Is dominion. First Year Premium.
On Tuesday, shares of Max Financial Services rose nearly three% on the BSE, ie, closing at 890.50 appi, while that of Axis Bank. To end the day at 677.85, down by less than 1%.
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