Axis Bank to acquire balance 7% stake in Max Life for Rs 1,612 crore

economictimes.indiatimes.com:

Axis Bank has received approval to infuse Rs 1,612 crore in Max Life Insurance by subscribing to shares on a preferential basis. This will result in Axis Bank’s direct stake increasing to 16.22% in the life insurer. The collective stake of Axis Entities will increase to 19.02% in Max Life Insurance, the lender said in a release.

The bank will enter into a share subscription agreement to acquire 14,25,79,161 shares of Max Life on a preferential basis at a fair market value of Rs 113.06 a share. Axis Bank has the requisite approval from the Reserve Bank of India (RBI) for the proposed acquisition, but it requires consent from other regulators, including IRDAI, PFRDA, and CCI. The acquisition of the stake would strengthen the bank’s position in the life insurance business.

Axis Bank expects to complete the transaction in 4-6 months. “In the quarter in which the transaction is consummated, the said investment shall result in a CET-1 capital consumption for the bank,” Axis Bank said. Further, the bank will need to account for certain mark-to-market (MTM) losses, which will impact the profit and return ratios in the said quarter.

“It is clarified that this MTM loss is only reflecting accounting compliance and the economic value of the investment being made is not impaired in any manner whatsoever,” Axis Bank said. In 2021, Axis Bank announced the deal for the acquisition of a stake in Max Life Insurance Co, a subsidiary of Max Financial Services. The lender, through its entities, had collectively acquired a 12.99% stake in Max Life.