Diversified group Max India today said it had shelved a plan to raise funds through a rights issue by its arm Max Healthcare Institute after selling 26% stake in it for Rs 516.5 crore to South Africa's Life Healthcare Group.
Max India Director Corporate Development Mohit Talwar said that prior to the stake sale, Max Healthcare Institute (MHIL) was mulling a rights issue.
"It [rights issue] won't happen," he said but did not elaborate how much fund the company was planning to mop through the rights issue.
Talwar said Max Healthcare would invest the Rs 516.5 crore to be received from South Africa-based Life Healthcare Group for expansion and reducing the debt, which is estimated to be about Rs 900 crore.
"The money will be used for expansion, as we are doubling our bed capacity, and for reducing the debt," he said.
Max Healthcare Institute plans to open four new super speciality hospitals in North India by the end of this year.
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Analjit Singh-led Max India currently holds 91% stake in Max Healthcare Institute.
The South African company will invest by subscribing to fresh shares of Max Healthcare, Talwar said, adding that deal is an all cash transaction.
Life Healthcare Group is a leading healthcare service provider in South Africa with a market capitalisation of over $2 billion. Its network includes 63 hospitals with over 8,000 beds and a 27% market share in healthcare industry in South Africa.
One of the prominent hospital chains in the country, Max Healthcare Institute which presently runs six hospitals and two centres, currently has a capacity of over 930 beds.