After the completion of these transactions, Max Life would become a 70:30 joint venture between MFS and Axis Bank. The proposed transactions were subject to approval of requisite corporate and regulatory authorities (including the Insurance Regulatory and Development Authority of India, the Reserve Bank of India and the Competition Commission of India), the bank said.
Moreover, Max Life Insurance
would include Axis Bank’s name in its tag line to further enhance customer trust in the brand and highlight the strength of the partnership. “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,” Axis Bank said in a statement to the exchanges.
The joint-venture arrangement will significantly improve Max Life’s competitive position vis-a-vis competitors, including other private life insurers owned by large banks. In the joint venture, Max Financial will have the right to nominate four directors on the board of directors of Max Life, and Axis Bank will have the right to nominate three directors on the life insurer’s board. “One nominee director of the promoter group on the Board of MFSL shall be a person identified by Axis,” the bank said.
Also, if the merger is not completed within the pre-agreed timeline, the parties have contractually agreed on certain other outcomes which are detailed in the transaction documents. These included the right to swap up Axis Bank’s shareholding to Max Financial, tax consequence of which will be equally borne by the parties, the bank said.
On the deal, Axis Bank Managing Director and Chief Executive Officer Amitabh Chaudhry said, “We continue to believe in the long-term prospects of India’s under-penetrated life insurance space, the 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.”
“This move is an emphatic signal that Max Life will become an even more formidable player in the Indian life insurance space,” said Analjit Singh, founder & chairman of the Max group.
In February, the three parties – Axis, Max Financial and Max Life – had entered into an exclusive agreement with Max Financial Services and Max Life Insurance
to explore a long-term strategic partnership with the life insurance arm.
Axis Bank, already a bancassurance partner of Max Life Insurance, sells Max Life’s products as a corporate agent. The new premium generated through this arrangement has aggregated to over Rs 12,000 crore over a period of 10 years, while maintaining high persistency.
Apart from Axis Bank, Max Life’s bancassurance partners include YES Bank and Lakshmi Vilas Bank. Axis also has similar partnerships with the state-owned life insurance behemoth Life Insurance Corporation, and Bajaj Allianz Life Insurance Company.
At 12:45 pm on Tuesday, the shares of Axis Bank were trading at Rs 442.75 apiece on the BSE, up 3.62 per cent over their previous close. Max Financial Services was trading at Rs 482.7, up 6.66 per cent.