Max India will sell its 51 percent stake to the PE firm
Homegrown private equity major True North Capital is likely to lap up Max India’s stake in health insurance venture Max Bupa Health Insurance. The PE firm will acquire Max India’s 51 percent stake in the standalone health insurer.
The company is expected to make an announcement later today after the board meeting concludes.
True North was leading the race to acquire Max Bupa and was in talks with the promoter for the past five months. The deal is likely to value the health insurer at Rs 1,200 crore.
This will be the second such deal in the health insurance space after a consortium including Rakesh Jhunjhunwala along with WestBridge Capital won the race to acquire Star Health Insurance in 2018.
True North was earlier also in talks to acquire a stake in Royal Sundaram General Insurance. However, Belgian insurer Ageas finally purchased 40 percent stake in the company.
The insurance regulator, had in November 2017, allowed PEs and venture capital firms to become promoters of insurance companies with a five year lock-in period, only do so through a special purpose vehicle (SPV).
Standalone health insurers have been eyed by multiple PE firms due to the high double-digit growth in the industry given the low penetration. Further,
For the nine months ended December 31, 2018, Max Bupa's net loss increased to Rs 54.9 crore compared to Rs 10 crore in the year-ago period. It saw a 24 percent rise in the gross premium collection to Rs 626.78 crore.
For Max India, this could be the second such deal. In December 2018, Max India announced a stake sale in its healthcare services joint venture Max Healthcare Institute to Radiant Life Care backed by private equity (PE) firm KKR.The deal included Radiant Life's purchase of a 49.7 percent stake in Max Healthcare from South Africa-based hospital operator Life Healthcare International in an all-cash deal, followed by the demerger of Radiant’s healthcare assets into Max Healthcare. This will result in KKR and Radiant promoter Abhay Soi together acquiring a majority stake in Max Healthcare.