KKR acquires 10% in Max Financial

By: | Published: February 19, 2016 12:11 AM

The PE major made its investments from its Asian Fund II through portfolio investment

Private equity major KKR on Thursday announced it had acquired a 9.95% stake in Max Financial Services for an undisclosed amount, becoming the latest global player looking to grab a share in the Rs 3.5-lakh crore Indian life insurance sector.

Max Financial Services is the newly demerged entity of the Max Group that owns an approximately 72% stake in Max Life, the country’s largest non-bank private life insurance company.

KKR acquired the stake from sponsor group led by Analjit Singh, chairman emeritus of the Max Group. The PE firm made its investments from its Asian Fund II through the portfolio investment route. According to the markets participants deal would be valued at Rs 950-1,000 crore. Bulk deal data from Bombay Stock Exchange (BSE) showed that multiple transactions where upto 2.65 crore Max India shares changed hands at an average price of Rs 358.

Welcoming KKR’s investment, Analjit Singh said, “KKR has been a long-standing, value-added partner to Max Group across various business initiatives. The extension of our partnership couldn’t have happened at a more opportune time than now, following the listing of Max Financial Services which creates an unparalleled platform to invest in the Indian life insurance space.”

The partnership between KKR and Max Financial Services comes as the Indian life insurance sector steadily recovers from a recent slowdown and is poised for robust growth. Life insurance as a product category is significantly under-penetrated in India versus some of its Asian peers. Max believes that at this pivotal time for India’s insurance industry KKR brings significant experience and deep understanding of financial services and the life insurance space.

The Insurance Laws (Amendment) Act, passed in February 2015, allows foreign players to increase their stake in Insurance firms from 26% to 49%. In the past few months several of the foreign promoters have started increasing their stake in the insurance joint ventures, after regulator Insurance Regulatory and Development Authority of India (Irdai) clarified the issue of ‘management control’.

The latest includes, AIA Group which had increased its stake from 26% to 49% in Tata AIA Life Insurance Company. Earlier, Sun Life Financial had hiked their stake in Birla Sun Life Insurance (BSLI) from 26% to 49% at an investment 1,664 crore. Standard Life, had in August 2015, announced plans to buy 9% additional stake in its Indian insurance venture HDFC Life to raise its ownership to 35%, valuing HDFC Life at Rs 18,951.4 crore. British insurer, Aviva also announced its plan to raise stake in its Indian joint venture with Dabur Invest Corp to 49%.

Sanjay Nayar, Member and CEO of KKR India, said, “We continue to believe in India’s growth potential, increase in financial savings and resultant life insurance industry growth. Within the sector we are excited to partner with Analjit Singh and his team at Max Financial Services, a company which is well positioned in the life insurance industry.” JM Financial executed this trade on behalf of both parties.

Max Financial Services, a part of the $2-billion Max Group, is the parent company of Max Life. Max Life is a joint venture with Mitsui Sumitomo Insurance, a Japan-headquartered global leader in life insurance.

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