Home-grown private equity (PE) firm True North, which last week agreed to buy a controlling stake in Max Bupa Health Insurance Co. Ltd, is bullish on the domestic insurance market and is seeking more investment opportunities in life and general insurance sectors too, said a senior executive at the PE firm.
While its first investment in the insurance space is a buyout, according to True North managing partner Vishal Nevatia, the PE firm is also open to minority investments if it finds the right partner.
“We are looking at life and general insurance as well. If we find the right partner with an exciting vision and aligned values, we are happy to be a supportive minority partner. If there is a partner who is looking to dilute or sell out, and wants us to take majority control we are fine with that too," Nevatia said.
Mint reported on 26 February that True North will take a 53.5% stake in Max Bupa—comprising a 51% stake from the Max group and a 2.5% stake from Bupa. The deal valued Max Bupa at ₹1,001 crore.
Nevatia said True North would also consider inorganic opportunities to grow Max Bupa. “In terms of growth, we think Max Bupa has huge potential to grow organically. If we come across a ‘right’ inorganic opportunity, we will be very happy to pursue it."
True North and Bupa will also commit more capital to grow the business. “This is a business which will require more capital. We have planned to invest material amount of capital going forward. Bupa and True North are completely aligned, share the same vision and there will be an equal amount of commitment from both partners," said Nevatia.
The investment in Max Bupa builds upon the PE firm’s strength and past experience in healthcare. The healthcare sector makes up for a significant chunk of True North’s portfolio, with the firm having invested in companies such as hospitals chain Kerala Institute of Medical Sciences, Aster DM Healthcare, Manipal Hospitals and medical devices maker Trivitron.
“It is one of the spaces that we really like and we think that there are very few healthcare brands in India to which people can trust their health. Hence, we believe that if we can partner with entrepreneurs or leadership teams who are passionate about building a brand to which people can trust their health then that’s a wonderful place to be. We have done that in hospitals. We have partnered with five hospital chains in the last 20 years," said Nevatia.
Health insurance is an important part of the ecosystem of providing high quality healthcare to people at reasonable prices, he added.
True North has so far raised six PE funds with a combined corpus of $2.8 billion.
The Max-True North deal marked yet another PE investment and growing consolidation in India’s insurance sector.
In August, 2018, Star Health and Allied Insurance Co. Ltd had said that private equity firms WestBridge Capital and Madison Capital, besides 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 and General Group Plc.