MUMBAI: KKR-backed Radiant Life Care is in the preliminary discussions to acquire the 49.7 percent stake of Life Healthcare in Max Healthcare, according to recent Media reports.
Life Healthcare Group Holding which has the said 49.7% stake in Max Healthcare Ltd is considering a sale of its stake. Bloomberg reported that the Johannesburg-based company is working with Barclays to explore potential interest in its holding in Max Healthcare and also expecting around USD 406 million for its stake.
Radiant led by Abhay Soi is into the business of developing and redeveloping hospitals to provide high-end quaternary care. In 2010, Radiant forayed into healthcare with the re-development and commissioning of BLK, a 650-bed hospital and one of the largest private sector hospitals in Delhi and NCR. Beside this Radiant had collaborated with the Nanavati Hospital Trust in 2014 to take over the operations of Nanavati, a 350-bed multi-speciality hospital.
Max Healthcare, a subsidiary of Max India is a subsidiary of Max India in which Life Healthcare and Max India each own 49.7% stake whereas Analjit Singh and his family own 40.97 percent of the listed Max India, which has other subsidiaries including Max Bupa, which is healthcare insurance joint venture, and Antara, a senior-living platform.
Stating that discussions are at an early stage and there is no guarantee they will lead to a deal an executive told ET, “A formal sale process has been initiated as Life is keen to monetise its investment.Discussions and management meetings have taken place between both sides. But this will be a long-drawn process. Analjit Singh has to give his consent to any new partner.”
The executive further added “This will become a competitive process as others would also jump in. The South Africans too would like to maximise their value on the investment.”
The stake has also drawn initial interest from private equity firms such as TPG Capital, reports the daily.
Max Hospitals’ FY17 revenue grew 17% to Rs 2,454 crore, according to its annual report. The group said that profit was hit by demonetisation and price cuts imposed by the regulator. The chain has a strong presence in north India.
Speaking with ET, Rakesh Nayadu and Hitesh Gulati of Haitong International, a Japanese brokerage firm said, “MHC needs to invest an additional Rs 700 crore over the next three years to take full control of its earlier purchased hospitals, namely Saket City Hospital (Gujarmal Modi trust), Crosslay (Ghaziabad, UP) and a land parcel in Saket.”
They further added, “It also plans to invest Rs 400 crore to add 400 new beds at its existing hospitals over the next three years, all of which are likely to keep debt levels high… Max management has a track record of creating shareholder value.”
According to the Bloomberg report, Life Healthcare’s move to exit Max comes as its shares have fallen 15% in Johannesburg in the past year, giving it a market value of about $3.1billion.
In 2012, Life Healthcare acquired 26% stake in Max Healthcare for Rs 516 crore, two years later it further acquired 20% making it 46% by investing an additional Rs766 crore at Rs 67 per share.