Private equity firm True North will acquire controlling stake in Max Bupa Health Insurance (Max Bupa) for Rs 511 crore, subject to requisite regulatory approvals.
The all-cash transaction values Max Bupa, a joint venture between Max India and Bupa, at an enterprise value of Rs 1,001 crore and is subject to requisite regulatory approvals, Max India said in a statement.
"The company intends to utilise the proceeds to invest in both existing and new business opportunities which are currently under evaluation," Max India said.
Max India stated that its board has approved the sale of its 51 per cent stake in Max Bupa Health Insurance Company to True North. The transaction is expected to be completed within FY 2020.
Bupa, which holds 49 per cent stake in the joint venture, 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, the company said.
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, Max India said.
True North (formerly known as India Value Fund Advisors) is an active investor in Indian assets. Over the years, True North has made productive investments across the financial services and healthcare sector, to the tune of Rs 5,700 crore.
Commenting on the development, Analjit Singh, Founder & 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."
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.
Edited by Chitranjan Kumar