After the transaction gets processed, Max Financial will own a 70 per cent stake after the transaction is completed.
At present Max Financial Services holds a 72.5 per cent stake in Max Life and Mitsui Sumitomo Insurance (MSI) owns 25.5 per cent stake.
Axis Bank, the third-largest private bank has a minor stake in the life insurer Max Life, the fourth largest private life insurer in the country.
In a statement about the agreement, Amitabh Chaudhry, MD and CEO, Axis Bank, said: “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."
Analjit Singh, founder, and chairman, Max Group, said, “I believe that in Axis, we have found an exceptional partner and we have the conviction that this will make Max Life fundamentally stronger, better performing and will bring stability to the franchise. We will run the organization as if it’s an equal partnership, a philosophy which has held us in good stead earlier as well."
The lender had initially invested in the insurer almost a decade back, and in February, the bank said it had started exploring a deeper association with Max Life.
However, the lender didn’t disclose the amount it is paying for the stake. But media reports estimate the amount at Rs 1,600 crore (about $210 million) which will be paid in two stages.
Axis Bank expects the transaction to complete in six to nine months, subject to regulatory approvals from the central bank, the Competition Commission of India, and other regulators.
The joint venture is expected to “significantly improve” Max Life’s competitive position against its competitors, including the other large bank-owned private life insurers.
Axis Bank shares are trading 3.76 per cent higher at ₹443 on Tuesday.