Axis Bank, one of the largest private banking firms in India, is looking forward to venture into the life insurance business by acquiring a company. According to sources, Axis Bank’s executive committee has already approved this business venture. However, the bank has not yet settled on the company to be acquired. Some of the possible candidates for acquisition include Tata AIA and IDBI Federal Life Insurance.
Axis Bank already has a partnership with Max Life Insurance. The bank currently holds about 4.99% stake in Max Life. However, Max is currently looking forward to exit the life insurance business. Max has earlier sought a merger with HDFC Life, but the merger deal fell through due to lack of regulatory approval. If the proposed merger happened, it would have created an insurance giant with over Rs.1 trillion in assets.
Since Max Life is looking forward to merger with other players, Axis is likely to acquire a life insurance service provider on its own and operate in the market. It was also said that Axis even considered bidding for Max Life but the deal did not proceed after holding some preliminary talks. This is one of the reasons why Axis is currently looking forward to consider an alternative course to life insurance.
If Max Life manages to establish a deal with another bank in the market, Axis Bank might lower its stakes or completely exit from Max Life. As of now, Max Financial Service is the main shareholder of Max Life with about 70.01% stake. The other two shareholders are Mitsui (25%) and Axis Bank.
There were reports that Axis Bank is raising about $1.8 billion from various investors including Bain Capital. However, reports say that acquisition by Axis Bank will primarily be through sale of shares and warrants. Axis Bank already has a strong retail presence all over the country. This is likely to help the bank venture easily in the life insurance business.