Life Healthcare completes its stake equalization in Max Healthcare at an Enterprise Value of Rs 3650 Cr
LHC pays Rs. 766 Cr in an all cash deal at Rs 67.50 per share
MHC valued at industry leading multiple of 32 times FY14 EBITDA translating to an Equity Value of Rs. 2,884 Cr
Stake equalisation is in line with original joint venture agreement between the two partners
MHC to utilize funds for its 3rd wave of growth and to retire debt
IFC to also subscribe to additional equity at the same valuation to maintain existing stake
New Delhi, 10th November 2014: Life Healthcare (LHC), a USD 2 billion South African healthcare major, who had announced its intent of increasing its stake in Max Healthcare on July 22, 2014, has today completed the transaction by investing Rs. 766 crore in Max Healthcare (MHC), one of India’s leading private healthcare providers. LHC has paid Rs. 67.5 per share, to equalize its stake in MHC, in an all cash transaction which puts the enterprise value of MHC at Rs. 3,650 crore and its Equity value at Rs. 2,884 Cr.
Earlier, in January 2012, Life Healthcare had invested Rs 50.24 per share, translating to Rs 516.5 Cr, to acquire a 26% 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 crore to maintain their 7.5% stake in an expanded capital base at the same valuation.
Max India is one of India’s leading multi business corporates with interests in Life Insurance, Healthcare, Health Insurance and Senior Living. Since its inception almost three decades ago, it has had an experience of managing successful joint venture partnership due to its philosophy of open and transparent relationships always managed in the spirit of equal ownership.
Speaking on the development, Mr Rahul Khosla, Managing Director, 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 Cr directly in MHC by subscribing to fresh equity at Rs. 67.50 per share. It has also acquired 13.3% of existing stake in the Company from Max India at Rs. 67.50 per share for Rs. 383 Cr, to achieve an equal shareholding as that of its JV partner Max India.
Speaking at the occasion, Mr 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%, 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.”
Max Healthcare operates 12 hospitals in North India, with a focus on high end tertiary and quaternary care. It undertook an exponential phase of organic expansion a year ago, by launching four new hospitals in Delhi-NCR and North India to nearly double its capacity to almost 2000 beds. The company’s revenue in FY 14 was Rs. 1,407 crore, a growth of 22% YoY. Its EBITDA in the same period grew by 59% YoY, to Rs. 113 crore.
The Max India Group is a leading Indian multi-business corporate with a commanding presence in the Life Insurance, Healthcare and Health insurance sectors. In the financial year 2014, the Group recorded a consolidated turnover of Rs 117 billion. It has a total customer base of over 7.5 million, nearly 300 offices spread across India and employee strength of around 17,000 as on 31st March 2014. Max India Limited is a widely held company, listed on the BSE and the NSE. Its founder sponsor Analjit Singh holds 40.5% stake in the company. Other shareholders include some of world’s best Institutional Investors such as Goldman Sachs, Temasek, IFC (Washington), Fidelity, New York Life.
Life Healthcare is the second largest private hospital operators in South Africa. It currently owns and operates 63 facilities with 8322 beds in a comprehensive geographic spread over seven South African provinces and Botswana. It is also a leading provider of acute rehabilitation and mental health services in the country.
For more details contact:
Head – Communications
Max House, Okhla – III,
New Delhi-110 020
Tele # 2693 3601-10 extn. 196
Cell # +91 9873347428+91 9873347428
Garima Sharma Nijhawan
E-mail : Garima.firstname.lastname@example.org
Manager-Brand & Communications
Max India Limited
Max House, Okhla – III, New Delhi-110 020
Tele # 2693 3610 Extn. 240, Cell # +91 9811024077+91 9811024077