Shares of Max India rose 8.15 percent to close at Rs 67.05 on BSE on Tuesday. The buyback price represents a premium of 27 percent of the current share price.
Max India, part of Max Group, on September 15 announced it would explore a share buyback to reward its shareholders, as communicated during the divestment of Max Bupa.
The company plans to offer its public shareholders the option of taking Rs 85 per share for up to 20 percent of their shareholding in lieu of cancelling these shares.
Shares of Max India rose 8.15 percent to close at Rs 67.05 on BSE on September 15. The share buyback price of Rs 85 represents a premium of 27 percent to the day's closing share price.
Max India, which recently relisted on the Indian stock exchanges following a demerger process has a treasury corpus of over Rs 400 crore created primarily from the sale of its insurance subsidiary, Max Bupa.
Max India said it intends to utilise up to Rs 92 crore from this corpus for the capital reduction process, while the balance of Rs 300 plus crore will be used for growth and other operational expenses.
The Board of Max India approved the capital reduction exercise earlier today.
The proposal will also need to be approved by a special resolution of public shareholders. It will additionally need regulatory approvals including from stock market regulator and NCLT, Mumbai.
The approvals process is expected to take about 6-8 months, the company said.
After the capital reduction exercise, Max India’s outstanding shares will decrease by up to 20 percent to 4.3 crore from 5.38 crore.
Max India promoters have communicated their intention of not tendering their shares for capital reduction.
Consequently, their shareholding is likely to increase to 51 percent from the current 41 percent. They will seek a SEBI exemption from the open offer requirement accordingly. The final quantum of capital reduction will be based on SEBI’s decision on an exemption.
Max India is the holding company of Max Group’s Residences for Seniors and Senior Care business, collectively known as ‘Antara’. It also owns a skilling company, ‘Max SkillFirst’.
“We had expressed our intent to reward our shareholders at the time we divested our health insurance business Max Bupa," said Mohit Talwar, Vice Chairman, Max Group & Managing Director, Max India.
"This capital reduction process is a move towards that intent even though capital conservation has become important after the onset of COVID-19 induced economic slowdown. We will still have sufficient growth capital for growth and other expenses,” Talwar added.
Antara, Max India’s flagship operating business is an integrated service provider for all senior care needs. It operates across two categories – Residences for Seniors and Assisted Care Services. Antara’s flagship residential community is located in Dehradun with nearly 200 apartments. Earlier in the year 2020, it launched a new senior living facility in Noida, Sector-150.Read here on how Max Group is betting on senior care, following sales of hospitals and insurance businesses.