InvestorQ : How is Axis Bank likely to benefit from raising its stake in Max Life Insurance?
NISHA Nayak made post

How is Axis Bank likely to benefit from raising its stake in Max Life Insurance?

Answer
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5 months ago


Axis Bank plans to raise its stake in Max Life Insurance from the current level of 1.5% to 30% through an all-cash deal worth around Rs.1600 crore. The actual deal and the size are yet to be confirmed by the bank and by the insurance company. The deal will value Max Life Insurance at around Rs.5667 crore a steep 60% discount to its present market value. Axis Bank is likely to pay around Rs.28.60 per share of Max Life to buy 30% stake in the company. Currently, Max Financial Services holds 72.5% stake in Max Life. Among the other holders, Mitsui Sumitomo holds 25.5% while Axis Bank holds 1.5%. The deal will also entail a rearrangement of shareholding wherein Mitsui Sumitomo will exit Max Life and exchange that for a stake in Max Financial Services. As a result, Max Financial Services will have Analjit Singh’s family holding 22.1% and Mitsui Sumitomo holding 21.9%. Overall, this is likely to enhance the value of the Axis insurance franchise and become a logical extension to its distribution business.