BackMax Healthcare shares hit upper circuit on debut as firm eyes more acquisitions
Max Healthcare will look to buy 'value-accretive' single hospitals of reasonable size and scale in the Delhi-NCR region and Mumbai, said chairman and managing director Abhay Soi
PremiumNEW DELHI : Max Healthcare Institute Ltd will look to acquire stressed hospital assets, its chairman and managing director said on Friday, as shares of India’s second-largest hospital chain surged on the first day of listing.
“I think M&A (mergers and acquisitions) and turnarounds have been intrinsic to our growth, and we intend to stick to our knitting. Due to the current financial distress, a lot of hospital chains and balance sheets have been impacted in India. I believe this will throw up a lot of opportunities for us to consolidate our business and grow it further," Abhay Soi said at a virtual press conference on Friday.
Max Healthcare will look to buy “value-accretive" single hospitals of reasonable size and scale in the Delhi-NCR region and Mumbai, Soi said.
He said the company will also consider operations and management contracts with real estate developers and investment trusts. However, the plan is in the early stages and will be rolled out once the pandemic ends, Soi added.
Shares of Max Healthcare hit the 5% upper limit at ₹112.35 apiece on the BSE after opening at ₹107.
In 2018, Soi who founded Radiant Life Care Pvt. Ltd announced a complex deal with the Analjit Singh-led group, wherein Max India would hive off its hospital assets under Max Healthcare, and subsequently Radiant would be merged into the Max group. Subsequently, Radiant, with support from private equity firm KKR, took a 49.7% stake in Max Health Institute Ltd for ₹2,136 crore in June 2019, and Soi became the chairman and managing director.
Under the deal, the merged entity gets the Max brand, but has to change the logo. The merger of Radiant with Max hospitals was completed in June, followed by the listing of the combined entity. Max Healthcare was the third and largest acquisition by Soi.
Soi founded Radiant Life Care in 2000 after over a decade turning around distressed assets in sectors such as financial services and speciality chemicals. The company gained prominence when it acquired Dr. B L Kapur Memorial Hospital in Delhi a decade later. In 2014, it took management control of Mumbai’s prominent Dr. Balabhai Nanavati Hospital.
To be sure, Soi has never built a hospital and has instead only acquired prominent assets that were under financial duress.
“For me, I will not be looking at greenfields on my own. It’s an asset light model... Also, we will focus on metros due to the value proposition from both a doctor’s and a patient’s standpoint is more similar," he said in an interview on Wednesday.
While Max Healthcare will not look at greenfield operations, the company does have plans to expand its flagship super speciality hospital at Saket in Delhi, and the Nanavati hospital, Soi said.
The company will build another 350 beds at the 521-bed Max Super Speciality Hospital and 600 beds at the 348-bed Nanavati hospital.
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