Blackstone, Warburg vie for Max Financial stake

Mumbai: Global private equity (PE) firms Blackstone Group LP and Warburg Pincus Llc are in separate talks to invest in Max Financial Services Ltd for a minority stake, two people close to the development said.

Max Financial Services, led by billionaire Analjit Singh, is raising money to finance a potential acquisition by its life insurance unit Max Life Insurance Co. Ltd.

Mails sent to Blackstone and Warburg Pincus were not answered till press time.

“Both PE funds have expressed interest in the investment but it is subject to Max Life making an acquisition for which funds will be needed,” said the first of the two people cited above, both of whom spoke on condition of anonymity.

On 10 April, Max Financial had said its board has approved mobilisation of funds from KKR Capital Markets India Pvt. Ltd, TPG Global Llc and Standard Chartered Bank to finance an acquisition opportunity by Max Life. While the company did not disclose the amount it would raise, it had said the fundraise was well within the limit approved by its board. Its board has approved fund raising through both equity and debt up to Rs5,000 crore for investment in the life insurance business.

Mint on 13 February reported that Max Life is the front runner for IDBI Federal Life Insurance Co. Ltd, and is looking to pick a majority stake in the firm valued at around Rs6,000 crore. While IDBI Bank holds 48% stake in IDBI Federal Life, both Federal Bank and Belgian life insurer Ageas SA/NV hold 26% each. Max Life has been exploring acquisition opportunities for the past one year. In September 2017, it was in talks with HDFC Standard Life Insurance Co. Ltd for a merger, but did not get regulatory approvals. That merger would have created an insurance behemoth with assets worth Rs 1.1 trillion.

IDBI Bank has identified life insurance business as a non-core asset and is trying to exit it as part of its turnaround strategy.

The public sector lender was the first bank to go under the prompt corrective action (PCA) regime of the RBI in May last year due to high level of net non-performing assets and negative return on assets.

The bank is required to take measures including enhancement of capital.

Other firms that have been eyeing IDBI Federal Life include Tata AIA Life Insurance Co. Ltd, Kotak Mahindra Life Insurance Co. Ltd, Aditya Birla Sun Life Insurance Co. Ltd and Exide Life Insurance Co. Ltd.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.