Axis Bank to pick up remaining 7% stake in Max Life; Jefferies sees 16% upside in stock

Trade

• Watchlist
• Portfolio
• Message
• Set Alert

 

 

Choose Stock Exchange: BSE LIVE NSE LIVE

26 Aug, 2025 12:21

Volume

Todays L/H

More

×

Complying with the guidelines laid out by the insurance regulator, Axis Bank on Tuesday said it has entered into a revised agreement to acquire an additional 7 percent stake in Max Life Insurance at fair market value.

Earlier, Axis Entities had collectively acquired 12.99 percent of the equity share capital of Max Life. “We have entered into revised agreements with Max Financial agreeing that the valuation for the right to acquire the balance 7 percent equity stake of Max Life would be at fair market value using discounted cash flows,” the bank said in an exchange filing.

Follow our live blog for all the market action

According to foreign brokerage firm Jefferies, the deal on fair value would imply a transaction value of Rs 1,100-2,100 crore and Axis Bank will have to pay an Rs 700-1,700 crore more. “Deal is positive for Max Life and Max Financial Services,” it noted.

“Axis Bank may recover the value with higher commission that may impact the margin a bit. Max Life has lagged peers on growth in 9MFY23 and a pick-up here will aid re-rating,” it said. Max Life Insurance had 269 offices with Rs 1.07 lakh crore of assets under management as of FY22.

Jefferies has a 'buy' rating on Axis Bank with a target price of Rs 1,110 per share. The stock was trading flat at Rs 949.50 apiece on the NSE in early trading hours on Wednesday. It has gained 40 percent in the past six months. Max Financial Services was also trading flat at Rs 775 apiece at the time.

In 2020, Axis Bank and Max Financial Services had first announced the deal under which the lender proposed to acquire 29 percent stake in Max Life Insurance. "Should the merger not be completed by a pre-agreed timeline, the parties have contractually agreed on certain other outcomes which are detailed in the transaction documents, including a swap of Axis Bank shareholding to Max Financial, tax consequence of which will be equally borne by the parties," the companies had said in a regulatory filing and also described them as 'Value Creation Options'.

The transaction also provided for a ‘Put option’ under which Axis Bank could sell all its shares to Max Financial Services at Rs 294 apiece if the value creation option was not consummated. Later, sector watchdog Insurance Regulatory and Development Authority of India (IRDAI) raised concerns over some clauses in the merger agreement, including the ‘Put option’.

IRDAI also slapped Rs 3 crore and Rs 2 crore fines on Max Life Insurance and Axis Bank for violation of various provisions relating to the deal.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.​​​​​