London-based wealth management giant Capital International Group on Friday bought 4.6% stake from Max group’s founder Analjit Singh in Max Healthcare for around ₹515 crore. Two persons aware of the development confirmed this, adding that proceeds from the stake sale by Singh will primarily be used for paying off the debts that Singh owes in his personal capacity to various lenders.
On 22 June, Mint first reported that the promoters of Analjit Singh-led Max Group plan to raise ₹2,300 crore by selling their stake in the group’s healthcare and financial services companies after selling prime land at London’s Mayfair for ₹800 crore.
Singh and his family entities as the promoters of the group were looking to raise around ₹800 crore from his complete 7% stake sale in Max Healthcare, Mint had reported.
The stake sale was supposed to be a secondary market route through a block or bulk deal on the stock exchange, the Mint report had said.
With the stake sales, the promoters aim to pay off all their debt, which stood at ₹3,400 crore in December 2019.
Singh is also trying to sell some more overseas real estate and hospitality assets.
“We are fully committed to reduce the debt considerably within the current year. We have been working towards it in a structured manner. Our divestment of some private real estate in the UK recently allowed us to trim the debt to quite an extent. We plan to take some significant actions in the near future to become almost debt-free,” a spokesperson for the Singh family had said.
The promoters are looking to sell 10-15% of their 28.31% stake in Max Financial Services Ltd for around ₹1,500 crore.
“Singh had close to 7% stake in Max Healthcare. Of this, he has sold around 416 million shares or 4.6% stake. At Friday’s price of the stock, the value of the transaction could be close to ₹515 crore,” said the first person.
On Friday, Max Healthcare stock was trading almost 15% higher at ₹127.8 per share on BSE.
“The stake sale was planned after the control of Max Healthcare was transferred to Radiant Life Care Pvt. Ltd. After that deal, Singh is no longer the owner of Max Healthcare and this particular stake sale was strategically aimed to reduce the debts of the family that were availed in their personal capacity,” said the first person.
In December 2018, Radiant Life Care Pvt. Ltd, backed by private equity firm KKR and Co., agreed to acquire control of Max Healthcare Institute Ltd in a complex transaction that made the combined entity India’s third-largest hospital chain by revenue.
The merged entity operates more than 3,200 beds through 16 hospitals across India and is the fourth-largest by capacity.
In a five-step process, Radiant had first bought a 49.7% stake in Max Healthcare, a unit of Max India Ltd, from South African hospital operator Life Healthcare in an all-cash deal. Thereafter, Max Bupa and Antara Senior Living, two other units of Max India, were separated into a new entity and shareholders of Max India received one share each of the new company for every five shares held.
Radiant Life then merged with Max Healthcare, giving KKR and Radiant promoter Abhay Soi a majority stake in the combined entity.
In the combined entity, KKR owns 51.9% and Soi 23%. Analjit Singh, the founder of Max India, ceased to be a promoter in the merged entity and had a 7% stake after selling 4.99% to KKR in the merged entity.
Soi leads the combined entity as its chairman.
The move had ended Singh’s entrepreneurial journey in the healthcare space that he had started more than 17 years ago.
The merged entity is the largest hospital network in North India.
This article was first published on livemint.com