Tuesday, 28 April 2020

Max Life to be 70:30 Joint Venture Between Max Financial Services and Axis Bank

By 121 News
Chandigarh April 28, 2020:-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% 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 20. This is an outcome of the inter-se discussions after the three companies had signed a confidentiality and exclusivity arrangement on 20th Feb 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% stake in Max Life and Mitsui Sumitomo Insurance (MSI) owns 25.5% 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% 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.  Post completion of the series of transactions, Max Life will become a 70:30 joint-venture between MFS and Axis Bank. The proposed transactions are subject to approval of requisite corporate and regulatory authorities (including RBI, IRDAI and CCI). 

Announcing the transaction, Amitabh Chaudhry, MD & CEO, Axis Bank, said that 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.

Welcoming the development, Analjit Singh, Founder and Chairman, Max Group, said that 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.

Pralay Mondal, Executive Director - Retail Banking, Axis Bank, added, "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.

No comments:

Post a Comment