Axis Bank, Max Financial Services shares gain up to 6.6% after lender raises stake in Max Life Insurance

New Delhi: Shares of Axis Bank and Max Financial Services on Tuesday gained up to 6.6 percent after the bank decided to raise its stake in Max Life Insurance to 30 percent.

Axis Bank shares zoomed 6.61 percent to close at Rs 455.55 on the BSE. During the day, it jumped 7.24 percent to Rs 458.25.

Max Financial Services also gained 5.14 percent to close at Rs 475.80. It rose by 8.79 percent to Rs 492.35 during the session.

Axis Bank has decided to raise its stake in Max Group promoted Max Life Insurance to 30 percent, a development which values the insurer at over Rs 5,000 crore.

Representational image. Reuters.

With the deal going through, sources said, the bank is expected to pay Rs 1,600 crore to Max Financial Services (MFS), the holding company of Max Life.

Axis Bank holds about 1 percent stake in Max Life and is the biggest banking channel partner for the distribution of its products. Products sold through the bank reportedly contribute for 54 percent of Max Life's revenues.

The boards of Axis Bank, MFS and Max Life approved the transaction late on 27 April, a joint statement said on Tuesday.

"This is an outcome of the inter-se discussions after the three companies had signed a confidentiality and exclusivity arrangement on 20 February, 2020 to explore the possibility of a long-term strategic partnership between Axis Bank and Max Life," it said.

Interestingly, the deal comes at a time when the economy is hit by the COVID-19 crisis impacting all sectors of the economy, including the financial sector.