Implication Axis Bank buying Max Life Insurance Stake

The mergers and acquisitions need to be monitored to understand the implications on the buyer. At times the merger cost outgo may have a negative impact on the buyer for initial period. Lets see how this merger is going to help Axis bank

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.

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.

Axisbank is a buy since the commencement of the lockdown and this acquisition will go a long way in enhancing the value of Axis bank.

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