InvestorQ : Is it correct that Axis Bank is buying out Max Life Insurance and what does it mean for Axis Bank price?
prachi Patwardhan made post

Is it correct that Axis Bank is buying out Max Life Insurance and what does it mean for Axis Bank price?

Answer
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1 year ago


The deal is not yet finalized but Max Life is reported to be in advanced stage talks with Axis Bank to sell a stake in the insurance company to Axis Bank. Interestingly, the deal was originally supposed to happen with HDFC Life, which did not go through due to objections raised by IRDA. Amitabh Chaudhry, who is currently the CEO of Axis Bank, was the CEO of HDFC Life back then. To that extent Amitabh surely understand the nuances of the deal very well.

The merger of Axis Bank and Max Life, if it goes through, will require the approval of RBI and IRDA since one is a bank and other is an insurance company. For Max Life, it gives them a ready access to Axis Bank bancassurance customers. For Axis Bank it adds one more line of revenues for them in the form of insurance origination and selling. Axis Bank has recovered sharply in the last few months after the new CEO took over. Axis Bank is quoting very close to its annual high price and the momentum could surely be in its favour. With a bottoming out of the NPA looking likely, the stock could benefit from this insurance accretion. One can buy with a short term target of Rs.850 on the stock.