Life Healthcare completes stake equalisation in Max Healthcare at enterprise value of Rs 3650 cr

Life Healthcare (LHC), a South African healthcare major, has completed stake equalisation in Max Healthcare (MHC) by investing Rs 766 crores. LHC has paid Rs 67.5 per share, to equalise its stake in MHC, in an all cash transaction which puts the enterprise value of MHC at Rs 3,650 crores and its equity value at Rs 2,884 crores.

Earlier, in January 2012, Life Healthcare had invested Rs 50.24 per share, translating to Rs 516.5 crores, to acquire a 26 per cent stake in Max Healthcare. The current transaction has led to equalization of stake of both joint venture partners as envisaged in their original JV agreement.

Post transaction, both JV partners will have equal representation on the MHC Board. The brand name of Max Healthcare will remain unchanged.

IFC, Washington, an existing investor in MHC will also subscribe to additional equity of MHC by infusing Rs 31 crores to maintain their 7.5 per cent stake in an expanded capital base at the same valuation.

Speaking on the development, Rahul Khosla, MD, Max India and Chairman, Max Healthcare, said, “Max India group has a successful history of partnership and as envisaged, Max India and Life Healthcare’s joint venture has evolved into a mutually beneficial partnership with a clear meeting of minds on critical decisions. LHC’s considerable experience in managing a large and widespread network of hospitals will be extremely beneficial for MHC as it prepares itself for the third wave of growth. Both the joint venture partners are committed to expand and grow the company rapidly.”

LHC has invested Rs 383 crores directly in MHC by subscribing to fresh equity at Rs 67.50 per share. It has also acquired 13.3 per cent of existing stake in the company from Max India at Rs 67.50 per share for Rs 383 crores, to achieve an equal shareholding as that of its JV partner Max India.

Speaking at the occasion, Mohit Talwar, Dy Managing Director, Max India, who has been instrumental in completing the transaction said, “The investment in Max Healthcare provides LHC a stronger platform to participate in the high growth Indian private healthcare space. Additionally, IFC has expressed its intention to buy additional equity in MHC to maintain its stake of 7.5 per cent, thereby demonstrating its faith in MHC and the Indian healthcare space. We have multiple growth opportunities lined up, including expansion of our flagship super-speciality hospitals in Delhi. A portion of the proceeds will also be used to retire some debt which will further improve the financial performance.”

EH News Bureau