The deal values Max Bupa at Rs 1,001 crore and is expected to be completed within FY20.
Private equity investor True North will buy Max India's 51 percent stake in Max Bupa Health Insurance for Rs 511 crore. The transaction values Max Bupa at Rs 1,001 crore, and is expected to be completed in FY20.
Max Bupa Health Insurance is a joint venture between Max India and Bupa where the foreign partner holds 49 percent. The company in a statement said that Bupa remains committed to the joint venture and will continue to play an active role in the company.
Max India said that it will utilise the proceeds of this deal to invest in both existing and new business opportunities which are currently under evaluation.
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 be retained.
True North (formerly known as India Value Fund Advisors) is an active investor in Indian assets. Over the years, True North has made investments across the financial services and healthcare sector, to the tune of Rs 5,700 crore.
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."
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.
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. 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."
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.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.