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KKR-backed Max Healthcare engages Citi, HSBC, Credit Suisse and Kotak as investment bankers for Rs 1,200 crore QIP

Abhay Soi, a first-generation entrepreneur and turnaround expert in the hospitals segment is the Chairman of Max Healthcare. He holds a 23.26 percent stake while co-promoter private equity firm KKR holds 51.94 percent.

October 30, 2020 / 07:27 AM IST

Max Healthcare, the country’s second largest healthcare chain by revenues, has finalised four merchant bankers as it looks to strengthen its balance sheet and prepare for a Rs 1,200-crore fundraise through the qualified institutional placement route (QIP), sources with knowledge of the matter told Moneycontrol on Thursday.

“Citi, HSBC, Credit Suisse and Kotak Mahindra Capital have been mandated for the proposed QIP. Depending on market conditions and pricing, the deal may be launched post the firm’s Q2 results,” said one of the individuals cited above.

“The roadshows for the QIP have concluded and saw good demand from institutional investors,” added a second individual.

Both individuals spoke to Moneycontrol on condition of anonymity.

Credit Suisse, Citi and HSBC declined to comment. Moneycontrol is awaiting an email response from Kotak Mahindra Capital.


In response to an email query from Moneycontrol, Max Healthcare said, “As you are aware, the board of directors and shareholders of the company had, by way of resolutions dated September 1, 2020 and September 29, 2020, respectively, approved undertaking a QIP. Any such QIP may, to the extent applicable, be undertaken with a view towards complying with the minimum public shareholding threshold prescribed under the Securities Contracts (Regulation) Rules, 1957. Further details with respect to the QIP, including with respect to the use of proceeds of the QIP, merchant bankers appointed, etc. will be communicated by way of the relevant offer document and in accordance with applicable law.”

Under the norms prescribed by market regulator SEBI, listed entities are required to have at least 25 percent public shareholding. As per the latest shareholding pattern available on the exchanges, the public shareholding in Max Healthcare, which made its market debut this August, is 24.75 percent.

Abhay Soi, a first generation entrepreneur and turnaround expert in the hospitals segment is the Chairman of Max Healthcare. He holds a 23.26 percent stake while co-promoter private equity firm KKR holds 51.94 percent.

Max Healthcare origin, D-Street debut, and performance so far

Max Healthcare was formed following a court-approved scheme of amalgamation involving the merger and demerger of the healthcare assets and business of Radiant Life & Max Healthcare and the residual Max India (following the demerger of Max Bupa and Antara Living). It listed on the domestic bourses on August 21st, 2020, and its market capitalisation (m-cap) at the end of day’s trade on 29th October stood at Rs 9,389 crores.

The restructured entity’s EBIDTA rose by more than 60 percent in FY20 and, according to the firm, it outperformed rivals such as Apollo Hospitals and Fortis in Q2, Q3 and Q4 in terms of EBIDTA margins and revenues.

In Q1 FY21, the firm reported a loss of Rs 355 crore, against a net profit of Rs 9 crore in the corresponding year-ago period. Gross revenues slipped to Rs 610 crore vs Rs 1,059 crores during the same period. “Despite Covid-19 impact, the company was able to maintain a stable cash position during the quarter, largely on the back of collections from government debtors and tax refunds,” the firm said.

“2021 has been a washout year for the hospital segment due to Covid-19. But many of the players have done a great job in rationalising costs and on the savings front. There is a lot of pent-up demand, and once international patients return, the sector will get back to pre-Covid EBIDTA levels,” says Param Desai, VP, Elara Capital.

As of August, 2020, Max Healthcare had 17 facilities with a bed capacity of around 3,400, over 4,400 clinicians and more than 15,000 employees. Its footprint is spread across the NCR (National Capital Region), Mumbai, Mohali, Bathinda and Dehradun. Its super-speciality hospitals provide high-end services including solid organ and bone marrow transplants.

Based on figures at the time of listing, the top three segments in terms of revenue contribution were as follows - 16 percent came from the fast-growing oncology vertical, 12 percent from cardiology while other specialities like neurology, orthopedics and nephrology contributed around 8 percent each.

Apollo Hospitals is the market leader in India's healthcare segment based on revenues, with Fortis, Narayana Health and Manipal Hospitals completing the top-five list.
Ashwin Mohan
ISO 27001 - BSI Assurance Mark