Founder Analjit Singh sells 4.6% stake in Max Health

MUMBAI: Max Group founder Analjit Singh on Friday sold 4.6% stake in Max Healthcare to buyers including American investment firm Capital Group and a unit of Hong Kong based hedge fund manager Ward Ferry for around ₹515 crore, two people aware of the development said. Singh will use the sale proceeds to pay off his personal debt, the people said on condition of anonymity.

“Singh had close to 7% stake in Max Healthcare. Of this, he has sold around 416 million shares or 4.6% stake. At Friday’s price of the stock, the value of the transaction could be close to ₹515 crore,” said the first person cited above.

Mint was the first to report on 22 June that Singh and his family entities were looking to sell their entire 7% in Max Healthcare for ₹800 crore, as part of raising ₹2,300 crore by stake sales in the group’s financial and healthcare businesses. The sale was expected to be a block deal or bulk deal on the stock exchange, the report had said. Singh is also trying to sell some more overseas real estate and hospitality assets. In March, he sold a prime plot at London’s Mayfair for ₹800 crore.

Radiant Life Care Pvt. Ltd became the majority owner of Max Healthcare in a complex transaction beginning 2018, bringing the Singh family’s stake down to 7%. Max is now India’s second largest hospital chain by revenue, operating more than 3,200 beds through 16 hospitals across India and is the fourth-largest by capacity.

“The stake sale was planned after the control of Max Healthcare was transferred to Radiant Life Care. After that deal, Singh is no longer the owner of Max Healthcare and this particular stake sale was strategically aimed to reduce the debts of the family that were availed in their personal capacity,” said the first person.

With the stake sales, the Singh family aims to pay off all its debt, which stood at ₹3,400 crore in December 2019.

“We are fully committed to reduce the debt considerably within the current year. We have been working towards it in a structured manner. Our divestment of some private real estate in the UK recently allowed us to trim the debt to quite an extent. We plan to take some significant actions in the near future to become almost debt-free,” a spokesperson for the family said in June.

The Singh family is now looking to sell 10-15% of their 28.31% stake in Max Financial Services for around ₹1,500 crore.

Shares of Max Healthcare closed 16.64% higher at ₹131 on the BSE on Friday, with the market viewing the investment by a large global player as a vote of confidence in the company’s prospects. The investment comes at a time when pharma stocks have outperformed the market in the wake of the covid-19 pandemic. BSE’s benchmark Sensex index closed unchanged.

Radiant, which is backed by private equity firm KKR and Co., took control of the hospital chain in a five-step transaction. The merged entity of Radiant and Max operates the second largest hospital network in North India.