Axis Bank has signed a definitive agreement to acquire a 9.9% stake in Fettle Tone, the promoter entity of Max Bupa Health Insurance (MBHI), for a cash consideration of $16.81m (INR908m).
The move follows the Mumbai-headquartered lender’s plans to fortify its presence in the Indian insurance space.
Established by True North Fund, Fettle is a special purpose vehicle (SPV).
It holds 55.6% of the total share capital of MBHI, a standalone health insurance company registered with the Insurance Regulatory and Development Authority of India.
Fettle registered a turnover of INR1.6m last March and its net worth stands at INR 7060m. Axis Bank expects to close the transaction this week.
Last month, the Insurance Regulatory and Development Authority of India (IRDAI) cleared a deal that will enable Axis Bank and its subsidiaries to acquire up to 12% stake in Max Life Insurance Company.
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By GlobalDataIn November last year, Axis Bank revised the deal terms following an objection of the central bank of the country and agreed to acquire up to 19% stake in the insurer, instead of the proposed 17%.
Earlier, the bank cut down the size of the stake that it plans to purchase in the insurer from 29% to 17%.
Axis distributes a number of insurance plans of Max Life under a bancassurance pact, which accounts for approximately 54% of Max Life’s revenue.
The deal is said to bolster the strategic and long-term partnership between the companies and also eliminate the uncertainty about a bancassurance partner for the insurance company.
Max Life Insurance, which was founded in 2010, offers a range of health, pension, and annuity. It also offers child, protection, retirement, savings, and growth plans to individuals and groups.
In 2019 August, India’s Aditya Birla Health Insurance (ABHI) signed a bancassurance deal with Axis.
Other developments in Indian insurance space
Last month, IRDAI issued new guidelines asking the insurers to offer a standard personal accident insurance policy to the customers by 1 April 2021.
The same month, the government of India said it will raise the foreign direct investment (FDI) in the insurance space from 49% to 74%.
Last December, it was said that Facebook’s instant messaging service WhatsApp is set to launch health insurance and micro-pension products on its Indian platform.
