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Axis Bank in talks to pick over 20% stake in Max Life: Report
Deal is aimed at building strategic partnership with Axis Bank. Axis Bank will infuse over Rs 2,000 crore in Max Life
Axis Bank is in talks to acquire more than 20% stake in Max Life Insurance through fresh issue of equity, the Economic Times reported on Thursday, citing multiple sources.
The deal is aimed at building a strategic and long-term partnership with Axis Bank which is also Max Life’s largest source of revenue at 54%, according to the report. It added that the deal with Axis Bank will eliminate the uncertainty about a bancassurance partner for the insurer.
Bancassurance deals are struck with banks so that cash is set off in the form of future commission income that they will earn. It is the most sought after distribution channel for insurance companies because of its relatively low cost.
According to the report, Axis Bank, which owns a shade over 2% in Max Life, will infuse more than Rs 2,000 crore in the latter. The funds are will be used for expansion.
Max Financial Services, which is listed, owns about 70% stake in Max Life, the country’s largest non-bank private life insurer. Japan’s Mitsui Sumitomo Insurance Co Ltd owns 26%, Axis Bank owns a tad over 2% and the rest is held by employees.
According to the report, Max’s life insurance business saw gross written premiums increase 14.6% year-on-year increase in FY19, driven by a 24.5% rise in first-year premiums. It had a market share of 9% among private companies and 6% overall in the September quarter.
