Exclusive: IFC to extend up to $75m to Max Healthcare via NCDs

IFC to extend up to $75m to Max Healthcare

International Finance Corporation, the investment arm of World Bank, has agreed to extend up to $75 million to Max Healthcare Institute Ltd through subscription of secured Non-Convertible Debentures (NCDs).

The financing facility is to aid Max Healthcare’s acquisition of a balance 49 per cent of Saket City Hospital Pvt Ltd and general capital expansion of its operations. The total cost of the project is estimated at around $325 million, said IFC in a disclosure.

Saket City Hospital provides medical services to Max Smart Super Specialty Hospital, a unit of and owned by Gujarmal Modi Hospital & Research Centre for Medical Sciences.

In late 2015, Max Healthcare had acquired a majority stake in Saket City Hospital Pvt. Ltd from Smart Health City Pte Ltd, the Singapore-based BK Modi Group company which used to manage and operate the Delhi-based hospital.

Max Healthcare plans to create a medicity across the joint complex of the two hospitals that are adjacent to each other. It will develop the complex to create a specialised centre for premier quaternary care with seven centres of excellence for selected specialties to provide comprehensive clinical services.

Max Healthcare is a joint venture between Max India Ltd and Life Healthcare, with each party holding a 45.95 per cent stake. It is the listed entity for healthcare assets of the Max group and includes MHIL, Max Bupa (Health Insurance) and Antara (senior living). IFC holds a 3.1 per cent stake in Max India and 7.5 per cent stake in Max Healthcare.

IFC, which had gradually acquired stake over the last 10 years, recently announced that it would will sell its entire 7.5 per cent stake in Max Healthcare for $65.3 million. It will sell an equal 3.75 per cent stake each in the company to the promoters Max India and Life Healthcare Group.

During FY 2017, Max Healthcare, Max India’s flagship operating company, reported a 23 per cent growth in gross revenues to Rs 1,939 crore in first nine months to Rs 203 crore over the corresponding period last year. During the period, a significant proportion of revenue came from Max Healthcare’s major specialities.

Through this latest financing, IFC will help provide the required funding to Max Healthcare that has been exploring possibilities to finance the acquisition from overseas market; External Commercial Borrowings cannot be used for such acquisition.

“IFC with its ability to subscribe to an NCD under its FPI (Foreign Portfolio Investor) license is uniquely positioned to provide the necessary funding with the requisite tenor and amount for the acquisition which is a critical milestone for the planned expansion program,” said the investment firm.

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