On October 30, 2020 Axis Bank Ltd along with its subsidiaries namely, Axis Capital Ltd and Axis Securities Ltd (together Axis Entities) has agreed to enter into revised agreements with Max Financial Services (MFS) Ltd to acquire up to 19.002% of the equity share capital of Max Life Insurance Co Ltd (Revised Agreements).
i.This is in accordance with the Para 5(b) of Master Direction- Reserve Bank of India (Financial Services provided by Banks) Directions, 2016.
ii.Earlier the Axis bank was to acquire 17.002% in Max Life Insurance.
iii.The revised plan came as RBI(Reserve Bank of India) did not consider the application of Axis bank for direct acquisition of a 17.002% stake.
Note
- The transaction is subject to conditions including regulatory approvals from Insurance Regulatory and Development Authority of India (IRDAI) , Reserve Bank of India(RBI) and Securities and Exchange Board of India(SEBI).
- Axis bank has been advised to be guided by Para 5(b).
Revised Agreement
i.Under the revised agreement Axis Bank will acquire up to 9.002% stake in Max Life, while Axis Capital and Axis Securities together will acquire up to 3% of the share capital of Max Life.
ii.Axis Capital and Axis Securities will also have the right to acquire an additional stake of up to 7% of the equity share capital of Max Life in one or more tranches.
Key Info
Currently MFS holds a 72.5% stake in Max Life, while Mitsui Sumitomo Insurance (MSI) holds 25.48% and Axis Bank holds 1.99% stakes.
Background
i.On April 28, 2020 Axis Bank and Max Financial Services signed definitive agreements to become joint venture partners in Max Life Insurance.
ii.Under this plan, Axis Bank was to acquire 29% stake in Max Life for Rs 1,600 crore and hold a total 30% stake in Max Life.
iii.On August 24, Axis bank decided to reduce the acquisition percentage from 29% to 17.002%.
Recent Related News:
Life Insurance Corporation of India(LIC) has acquired 4.23% Stake(105.98 crore shares) of YES Bank by purchasing from the open market. With this acquisition, the hold of LIC in YES Bank has increased from 0.75%(19 crore shares) to 4.98%(125 crore shares).
About Axis Bank Ltd:
Headquarters– Mumbai, Maharashtra
Managing Director(MD) and Chief Executive Officer(CEO)–Â Amitabh Chaudhry
Tagline– Badhti Ka naam Zindagi
Founded– 1993
About Max Life Insurance Company Ltd:
Headquarters– New Delhi, India
MD & CEO– Prashant Tripathy
