Mumbai: Home-grown private equity (PE) firm True North has agreed to buy the 51% stake of Analjit Singh-promoted Max India Ltd in Max Bupa Health Insurance Co. Ltd.
The all-cash deal pegs Max Bupa's enterprise valuation at ₹1,001 crore.
Max India will receive ₹511 crore for its stake.
The transaction is subject to approval from shareholders and regulatory bodies and is set to be completed by the end of this fiscal year, Max India said. The company aims to invest the deal’s proceeds in existing and new business opportunities.
Mint had on 13 December reported that Max India was in talks to sell its stake in Max Bupa to True North. The private equity firm is also buying an additional 2.5% stake in Max Bupa from Bupa Group for ₹25 crore.
Max Bupa, which claims to be the fourth-largest standalone health insurance provider in India, is a 51:49 joint venture between Max India and UK’s Bupa Finance Plc. The stake sale in Max Bupa follows the announcement by Max India to sell a majority stake in Max Healthcare Institute Ltd to Radiant Life Care Pvt. Ltd, which is backed by PE firm KKR and Co. The merged entity will operate more than 3,200 beds in 16 hospitals across India and will be the fourth-largest by capacity.
“We are rebalancing our portfolio of businesses with a much sharper focus on growing shareholder value and this transaction is a step towards that journey," said Analjit Singh, founder and chairman of Max Group.
KPMG Corporate Finance Llc was the lead financial adviser to Max India.
Simeon Preston, chief executive officer (international markets) at Bupa Group said the company “is committed to the Indian health insurance market and sees exciting opportunities for growth over the coming years". “We look forward to working with our new partner True North to grow the Max Bupa business," he said.
True North, which has so far raised six PE funds with a combined corpus of $2.8 billion, has been over the last few years looking to buy an insurance company.
In April 2017, the PE firm agreed to buy Religare Enterprises Ltd’s 80% stake in Religare Health Insurance Co. Ltd, valuing the company at ₹1,300 crore. The deal, however, was not concluded.
“As the health insurance sector grows in India, True North aims to build the most trusted brand in health insurance in the country. We believe Max Bupa is one of the best positioned brands and businesses in the sector," said Divya Sehgal, a partner at True North.
The Max-True North deal marks yet another PE investment and growing consolidation in India’s insurance sector.
In August 2018, Star Health and Allied Insurance Co. Ltd said private equity firms WestBridge Capital and Madison Capital and billionaire investor Rakesh Jhunjhunwala had jointly agreed to buy Star Health.
In June, PE firm Warburg Pincus took a 26% stake in IndiaFirst Life Insurance Co. Ltd from Legal & General Group Plc.
In November, Royal Sundaram General Insurance Ltd sold a 40% stake to Ageas Insurance NV of Belgium for ₹1,520 crore.