New Delhi [India] April 28 (ANI/NewsVoir): Axis Bank Limited (Axis Bank) and Max Financial Services Limited (MFS) announced the signing of definitive agreements to become joint venture partners in Max Life Insurance Company Limited (Max Life).
Axis Bank will hold 30 per cent stake in Max Life post transaction closure. The development will result in a mutually beneficial and enduring relationship between Axis Bank and Max Life and bring the stability of a long-term partnership to India's fourth largest private life insurance franchise.
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.
The Boards of Axis Bank, MFS and Max Life approved the transaction late on 27th April 2020. This is an outcome of the inter-se discussions after the three companies had signed a confidentiality and exclusivity arrangement on Feb 20th 2020 to explore the possibility of a long-term strategic partnership between Axis Bank and Max Life.
Max Financial Services presently holds a 72.5 per cent stake in Max Life and Mitsui Sumitomo Insurance (MSI) owns 25.5 per cent stake. Axis Bank also has a minor stake in the life insurer.
The aforesaid transaction with Axis Bank follows the ongoing swapping by MSI of 20.6 per cent stake that it holds in Max Life with a 21.9 per cent stake in MFS.
MFS also plans to purchase MSI's balance stake in Max Life. Post completion of the series of transactions, Max Life will become 70:30 joint venture between MFS and Axis Bank. The proposed transactions are subject to approval of requisite corporate and regulatory authorities (including IRDAI, RBI and CCI).
Max Life's tag line will include Axis Bank's name, which will further enhance customer trust in the brand and highlight the strength of the partnership.
Axis Bank is the third largest private bank and Max Life is the fourth largest private life insurer in India. The two companies have had a successful business relationship for over a decade, providing long term saving and protection products to over 19 lakh customers.
The total premium generated through this relationship has aggregated to over Rs 38,000 crores. Both companies have invested extensively in product and need-based sales training, thereby leading to consistent increase in productivity.
"We continue to believe in the long-term prospects of India's under-penetrated life insurance space, current environment notwithstanding. We see this joint venture creating immense value for our stakeholders given our long standing, high performing partnership with Max Life. We believe this transaction will allow us to deepen our working relationship leading to better integrated teams and infrastructure and a superior alignment in our approach", said Amitabh Chaudhry, MD and CEO, Axis Bank while announcing the transaction.
"This move is an emphatic signal that Max Life will become an even more formidable player in the Indian life insurance space. We at Max Group have had a long-standing record of having successful joint ventures. We achieve this by choosing partners with complementary skills, a matching belief system and a shared vision for the future of the business. I believe that in Axis, we have found an exceptional partner and we have conviction that this will make Max Life fundamentally stronger, better performing and will bring stability to the franchise. We will run the organization as if it's an equal partnership, a philosophy which has held us in good stead earlier as well", said Analjit Singh, Founder and Chairman, Max Group welcoming the development.
"This transaction would enable Axis Bank to take its partnership with Max Life to the next level. Max has been a well-managed, professional organization with product and distribution capabilities that can be significantly augmented by this partnership, thus leading to greater customer value", added Pralay Mondal, Executive Director - Retail Banking, Axis Bank.
"The strategic benefits of this partnership will be multi-pronged and will continue to unfold over a long period of time. I have no doubt that this joint venture has the potential to catapult Max Life further up on the life insurance league table. The combined trust of the Max and Axis franchise will hold us in good stead, especially in the current scenario where people are seeking safety in well governed and trusted institutions", said Mohit Talwar, Vice Chairman, Max Group and Managing Director, Max Financial Services while elaborating the rationale for the potential transaction.
Axis Capital acted as the sole advisor to Axis Bank for this transaction.
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