Life Healthcare to invest Rs. 516.5 Cr. in Max Healthcare for 26% stake
All cash deal puts enterprise value of Max Healthcare (MHC) at over Rs. 2,300 Cr
Largest FDI in Indian Healthcare space
Life Healthcare (LHC) operates 63 hospitals and 8,000+ beds in South Africa
2nd largest hospital operator in SA with 27% market share and market cap of over USD 2 billion
LHC to provide expertise in areas of Nursing & Training, IT & Information, and Cross Facility Systems Standardization
New Delhi, 12 Oct 2011 Life Healthcare (LHC), a USD 2 bln South African healthcare major, is set to invest Rs. 516.5 crore in Max Healthcare (MHC), one of India’s leading private healthcare provider, at Rs. 50.55 per share for a 26% stake, in an all cash transaction which puts the enterprise value of MHC at over Rs 2,300/- crore. This would be the largest FDI transaction in the Indian Healthcare space. The deal would provide LHC a platform to participate in the high growth Indian private healthcare space.
MHC is a subsidiary of Max India, one of India’s leading multi business corporates with interest in Life Insurance, Healthcare and Health Insurance. Max India is listed on BSE and NSE. MHC’s other shareholder includes IFC, Washington
The deal is subject to approval of the Board’s of LHC and MHC and diligence.
Life Healthcare will have the right to nominate two directors on the board of Max Healthcare. It will also have consultative and informative rights.
Max Healthcare, which operates 8 hospitals in the Delhi-NCR region and, is in the middle of organic expansion, opening 4 new hospitals in Delhi-NCR and North India within the current year, in the process almost doubling its capacity to 1,900 beds. It recently started 2 of these hospitals in Mohali and Bathinda, Punjab. Max India will use the stake sale proceeds largely to fund MHC’s current expansion, and to optimize its cost of funds, leading to an improved financial performance.
MHC’s revenue in Q1 FY 12 was Rs. 186 crore, a growth of 19% YoY. Its EBITDA in the same period grew by 133% YoY, to Rs. 11 crore.
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.
Life Healthcare is a highly profitable company with cutting edge practices in expertise in the areas such as Nursing & Training, IT & Information, and Cross Facility Systems Standardization etc. It will work closely with MHC to transplant its expertise in these areas.
About Max Healthcare
Max Healthcare is the country’s leading comprehensive provider of standardized, seamless and international-class healthcare services. It is committed to the highest standards of medical and service excellence, patient care, scientific and medical education. Max Healthcare operates eight facilities in Delhi & NCR, offering services in over 30 medical disciplines. Max Healthcare has an out-patient facility, Max Medcentre and a Speciality centre focused on Eye and Dental care at Panchsheel Park, secondary care hospitals at Pitampura, Noida and Gurgaon and state-of-the-art tertiary care facilities at Saket, Patparganj in South & East Delhi respectively.
The tertiary care hospitals at Saket include Max Super Speciality Hospital (East Block), which is a centre of excellence for Cardiac Care, Minimal Access, Metabolic & Bariatric Surgery and Cancer Care and Max Super Speciality Hospital (West Block), a super speciality facility in Orthopaedics & Joint Replacement, Neurosciences, Paediatrics, Obstetrics & Gynaecology, Aesthetic & Reconstructive Plastic Surgery and Internal Medicine. In addition, it offers services in the disciplines of Urology, ENT, Gastroenterelogy, Nephrology, Dermatology, Mental Health & Behavioural Sciences amongst others.
Max Healthcare shall consolidate its position in Delhi & NCR this year with the launch of its 9th Facility – Max Super Speciality Hospital in Shalimar Bagh – later this year. Max Healthcare extended its footprint in North India by inaugurating 2 new Super-Speciality Facilities in Mohali & Bathinda (in PPP with Govt. of Punjab) in September 2011. Another Facility at Dehradun is on the anvil.
Max Healthcare has a base of over 1250 leading doctors, 3000 employees and 11,00,000 patients with number of beds growing to over 1900 in the next three years.
About Max India
Max India Group is a multi-business corporate, driven by the spirit of enterprise and focused on people and service oriented businesses. The Company is headquartered in New Delhi, India. Max India is in the ‘Business of Life’ with its vision is to be one of India’s most admired corporates for Service Excellence. It ‘Protects Life’ through its Life Insurance subsidiary Max New York Life, a joint venture between Max India and New York Life, a Fortune 100 company; ‘Cares for Life’ through its Healthcare company, Max Healthcare, a subsidiary of Max India Limited; ‘Enhances Life’ through its Health Insurance company, Max Bupa Health Insurance, a joint venture between Max India and Bupa Finance Plc., UK; and ‘Improves Life’ through its Clinical Research business, Max Neeman, a fully owned subsidiary of Max India. From its past, Max India continues its interest in manufacture of Speciality Products for the packaging industry.
In financial year 2011, Max India Group recorded a consolidated turnover of nearly Rs. 79 billion. The Group’s businesses have built commanding presence in their respective sector through a total customer base of over 4.4 million, over 500 offices spread across India and people strength of 57,000 persons as on 31st March 2011.
The flagship company Max India Limited is a widely held public ltd company and is listed on the BSE and the NSE. The company led by Analjit Singh holding 36.5% stake with other shareholders including some of world’s best Institutional Investors such as, Warburg Pincus, Goldman Sachs and IFC.
About Life Healthcare
The Life Healthcare (LHC) is a key role player in the South African healthcare sector, primarily serving the market for private medically insured individuals, representing more than eight million people. The group has one of the most extensive footprints in southern Africa.
LHC has 27 years’ experience in operating private hospitals in South Africa. The group was listed on the JSE in 1999, and subsequently taken private in 2005 by a consortium of investors including senior management. On 10 June 2010 the Company relisted in the Health Care Providers sector on the JSE main board, under the share code LHC and ISIN: ZAE000145892.
LHC’s healthcare business is organised into two divisions:
representing 93% of LHC’s revenue comprising the core acute care hospital business and services for acute physical rehabilitation, mental healthcare and chronic renal dialysis. LHC has an extensive geographic network of 63 facilities comprising over 8,300 beds, including hospitals across seven of South Africa’s nine provinces and in the country’s most populous metropolitan areas. LHC operates a range of facilities adapted to meet the local demand in the various regions of the country, including complex, multi-disciplinary hospitals, community hospitals and specialised stand-alone facilities to provide the appropriate scale and scope of healthcare services. LHC hospitals admits over 600,000 patients annually and enjoys the support of approximately 2 700 specialists and other healthcare professionals.
Healthcare services division:
representing 7% of the group’s revenue for the year comprising acute and long term hospitalisation services to public sector patients provided by Life Esidimeni with , as well as contracted primary and occupational healthcare provided by Life Occupational Health.
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