Axis Bank looks to acquire a large stake in Max Life

MUMBAI: Max Life Insurance is discussing a large share sale with its biggest distributor Axis Bank even as regulatory opinion on the matter could make or break the deal, people directly aware of the matter said. Axis Bank accounts for more than half of Max Life’s business and is also the only large bank without an insurance arm.
The ongoing talks between Axis Bank and Max Life comes nearly two years after regulators spiked the latter’s merger deal with HDFC Life. Incidentally, new Axis Bank CEO Amitabh Chaudhry was spearheading HDFC Life when the merger was being discussed.

The country’s top private insurers belong to banking groups. These include SBI Life, ICICI Pru Life and HDFC Life.

When contacted, Axis Bank and Max Life holding company Max Financial Services said that they did not comment on market speculation. Max Life did not respond to a query sent on Monday till the time of going to press.

It’s unclear if Max Life is in talks with multiple suitors currently. IndusInd Bank had explored a majority share acquisition in Max Life, but talks didn’t progress as the former insisted on 51% control, sources said.


Sources cited earlier said deal talks between Axis and Max Life would depend on how the RBI and IRDAI view the proposed transaction. The banking regulator in the past has vetoed banks taking risky exposure or attempting diversification through subsidiaries. The regulator stuck to this view even as another new-generation private bank sought its opinion regarding a likely insurance acquisition last year.

Max Life has been looking for a banking partner. It had earlier looked at acquiring IDBI Federal Life Insurance — an arm of IDBI Bank — to get the parent’s distribution. However, the move fell through after its PSU rival Life Insurance Corporation acquired majority stake in IDBI Bank.

The holding company Max Financial Services, created through a demerger to provide investors access to life insurance business, has a market capitalisation of about Rs 11,700 crore currently. Shares of Max Financial Services ended nearly flat at Rs 434 apiece on Monday. Max Financial Services holds 70% stake in the life insurer, while Sumitomo of Japan, Axis Bank and other smaller shareholders including employees own the remaining 30%.

In earlier interviews, the chiefs of both Max Life and Axis Bank had expressed interest in taking the partnership forward. Max Life Insurance CEO Prashant Tripathy said that the company was keen on extending its relationship with Axis Bank, which ends in 2021.

Earlier in an interview to TOI, Axis Bank’s Chaudhry said that the bank had been thinking about reviewing its bancassurance model. “We have a unique opportunity, given our distribution franchise, to get into a long-term relationship with partners in life, general and health insurance. We should in the next six to 12 months conclude on that and move on with life because we are leaving money on the table.”

Analysts said the deal was logical, though some argued that it would drag down Axis Bank’s return on equity.

Analjit Singh-led Max Group is in the midst of a significant corporate restructuring, selling down majority shares in hospitals and health insurance businesses. It has entered into a definite agreement to sell stake in health insurer Max Bupa to private equity firm True North, while the hospitals business under Max Healthcare is being hived off in a deal with American buyout specialist KKR & Co.