Axis Bank seeks CCI nod to acquire 20% stake in Max Life

Axis Bank sought the Competition Commission of India’s (CCI) nod for its deal to acquire up to 20% stake in Max Life Insurance Company Ltd (Max Life) on Wednesday. The deal involves a stake sale to the bank’s subsidiaries, Axis Capital and Axis Securities as well.

As per the agreement, Axis Bank’s existing 2% stake in Max Life will increase to 9.9% while Axis Capital and Axis Securities will acquire 2% and 1% stake in the target firm, respectively.

After the first acquisition, either of the Axis entities have the right to increase their shareholding in Max Life by 7% in multiple tranches, taking the aggregate shareholding in the target firm to 19.99%, within 42 months of the first acquisition, according to the notice filed with the CCI.

“Acquirer 1 (Axis Bank) believes in the long-term prospects of India’s under-penetrated life insurance space. Acquirer 1 expects the proposed arrangement with their time-tested life insurance partner of ten years to create significant value for its stakeholders,” the notice said.

While not commenting on the impact to competition, Axis bank said in the filing that there would be vertical overlaps in its business and that of Axis Securities with Max Life in the upstream market for life insurance products in India and the downstream market for distribution of life insurance products in India.

The proposed combination would also be subject to approval from the Insurance Regulatory and Development Authority of India (IRDAI).

On Wednesday, Max Life’s parent company, Max Financial Solutions Ltd (MFSL), concluded a swap transaction of Mitsui Sumitomo Insurance Company’s (MSI) 20.6% stake in Max Life for a 21.9% stake in MFSL.

MFSL disclosed last month that the IRDAI had cleared the way for the preferential allotment of 7.54 crore of its equity shares of Rs 2 each, amounting to 21.9% of paid-up share capital, to MSI.

Max Life has a network of 250 branch offices spread across the country with over 14,000 employees.

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