The Board of Max India on Tuesday approved the sale of its 51% stake in Max Bupa Health Insurance Company (Max Bupa), to the leading Private Equity firm True North. The all cash transaction values Max Bupa at an enterprise value of Rs 1,001 crore and is subject to requisite regulatory approvals. Bupa, the existing joint venture partner in Max Bupa, remains committed to the joint venture and will continue to play an active role in the company as before through its Board positions and knowledge exchange initiatives.
At the conclusion of the transaction, True North will nominate directors on Max Bupa’s Board, while Max India’s nominated directors will step down. The use of the Max brand will be phased out over a period of two years and replaced with a suitable name. The Bupa brand name will continue as before.
True North (formerly known as India Value Fund Advisors) is an active investor in Indian assets. It has built deep knowledge and skills in the Indian market, investing in more than 40 Indian businesses over the last 19 years through its 6 investment funds with a combined corpus of over US$ 2.8 billion. Over the years, True North has made productive investments across the financial services and healthcare sector, to the tune of Rs 5,700 crore.
The transaction will lead to a cash inflow of Rs 511 crore for Max India. The company intends to utilize the proceeds to invest in both existing and new business opportunities which are currently under evaluation.
Commenting on the transaction, Analjit Singh, founder and chairman, Max Group, said, “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. We are proud of the high quality organization we have created in Max Bupa, with its innovative product portfolio, balanced channel mix and its customer first orientation. We are sure that Max Bupa will continue its excellent performance under its new shareholders, ably supported by the founding JV partner Bupa.”
“Our selection criteria for the potential investor in Max Bupa was based on a shared vision for the company, alignment with our JV partner Bupa, and a commitment to invest in the long term growth of the company. In this context, we are fortunate to handover our controlling stake in the company to True North,” said Mohit Talwar, vice chairman designate, Max Group.
Speaking about this investment, Divya Sehgal, Partner, True North said, “As the health insurance sector grows in India, True North is looking 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. The Max Group and Bupa have immensely contributed to the journey of Max Bupa and we look forward to building on the same in partnership with Bupa. Our priority is to work seamlessly with both teams at Max and Bupa through this transition towards the benefit of Max Bupa’s customers, employees and stakeholders.”
Stating its commitment to the Joint Venture, Simeon Preston, CEO, International Markets, Bupa, said, “Bupa 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.”
KPMG Corporate Finance acted as lead financial advisor to Max India in this bilateral transaction with True North. AZB & Partners and Khaitan & Co. acted as legal advisors to Max India and True North respectively.
The transaction is subject to execution of definitive agreements and approval from shareholders of Max India apart from regulatory bodies and is expected to be completed within FY 2020. The process of conclusion of Max Bupa’s divestment will run in parallel and independent of the recently announced composite transaction involving demerger of Max India and the merger of Max Healthcare with Radiant-KKR.