KKR emerges as main suitor to buy 47.5% stake in Max Healthcare

The Johannesburg-based Life Healthcare is amongst the second-largest hospital owner in South Africa

The race to buy a 47.5 per cent stake of South Africa-based Life Healthcare in Max Healthcare narrows, with private equity (PE) fund KKR emerging key suitor, especially after US PE fund BainCapital decided not to pursue an offer from merchant bankers. 

Even Max India, the holding company of Analjit Singh and an equal partner in Max Healthcare, has not evinced any interest to buy out its partners. Those in the know cite the stiff price being asked for the deal as one of the reasons. 

The Max group has helped its foreign partners, which wanted to divest from other joint ventures (JVs), by buying a part of their stake at a premium and then selling it to others.

For example, when New York Life Insurance wanted to get out of the JV insurance business due to global strategy changes, Max bought a part of the equity at a premium. No such offer has been forthcoming in this potential transaction, inform sources.   

chartJohannesburg-based Life Healthcare is the second-largest hospital owner in South Africa.  

While Life Healthcare and Max India have equal stake in the company, the management control is vested with Singh’s company. 

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The remaining equity is held by senior executives. Unlike Fortis where there was a battle between the contenders to buy out controlling interest for which they paid a hefty premium, the case is different in Max Healthcare, say sources.  An email to Life Healthcare did not elicit any response. 

Bain Capital and KKR declined to comment on the issue. A Max group spokesperson, too, withheld comment. 

KKR in alliance with Radiant Life Care, in which it has bought 49 per cent stake, has been scouting around in the health care space and was one of the bidders for Fortis Healthcare, which it eventually lost to Malaysia’s IHH Healthcare. 

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 Radiant owns the 650-bed BLK Hospital in Delhi and Nanavati Hospital in Mumbai.  Those in the know say any deal could take time as the details of the offer to sell the stake are still unclear.  

Max Healthcare runs over 14 hospitals with a capacity of 2,500 beds in north India. The company has been looking at doubling its capacity in the next five to six years as part of its expansion plans. 

A few years ago, Max Healthcare had bought the B K Modi-owned Saket Hospitals in Delhi for around Rs 3.5 billion and followed it up by buying the entire stake and rebranding it Max Smart Super Specialty Hospital.