GIC, Capital Group buy KKR's entire stake in Max Health; stock surges 10%

Singapore state fund GIC, US-based financial services firm Capital Group, and a few other institutions on Tuesday picked up KKR’s 26.8 per cent stake in hospital chain Max Healthcare Institute via block deals. Max Healthcare promoters, led by Abhay Soi, will now own 24 per cent in the company.

Shares of Max Healthcare shot up 10 per cent to close at Rs 397 apiece on the BSE as the US private equity (PE) giant sold its stake worth Rs 9,200 crore as part of its exit strategy. KKR sold its stake at the rate of Rs 353 a share, the BSE data showed.

Apart from GIC and Capital Group (New World Fund), the buyers included Smaller Cap World Fund, BNP Paribas Arbitrage Fund, Monetary Aut­hority of Singapore, WF Asian Reconnaissance Fund, and WF Asian Smaller Comp­anies Fund, according to the data.

KKR and Radiant Group had been the co-promoters of Max Healthcare since 2018, and with the latest exit, the company’s board will be restructured with three independent directors and new investors’ nominees joining the board in the coming days, said a banking source.

In 2018, KKR and Radiant had bought 49.7 per cent in Max Healthcare for Rs 2,120 crore. Radiant had acquired the other joint venture partner, South Africa-based hospital operator Life Healthcare, and merged its own assets into Max Healthcare. The entity had over 3,200 beds in 17 hospitals across India. In September last year, KKR had sold part of its stake for Rs 2,956 crore.

Abhay Soi will remain the chairman and MD and plans to raise his stake by 1 per cent. A spokesperson for Max Healthcare declined to comment. 

It’s the largest single block deal by a PE firm in India, a banker said. This is also the fastest sale of 47 per cent stake in a company, which started last September, the banker added.

Gaurav Trehan, partner and head of KKR India, said: “It has been a pleasure to have worked with Abhay and the dedicated team at Max Healthcare over these past five years to meaningfully invest in the company’s growth, innovation, and offerings on behalf of the patients across India who rely on Max’s critical care and services.”

GIC of Singapore has been increasing its India exposure in the last two years. In May, Aditya Birla Fashion and Retail raised Rs 2,195 crore by way of preferential issuance of equity to GIC. In October 2020, GIC invested Rs 5,512 crore in Reliance Retail Ventures, a subsidiary of Reliance Industries. In April this year, GIC affiliates invested Rs 119 crore in IRB-sponsored IRB Infrastructure Trust by way of a rights issue. Similarly, Capital Group is investing in the Indian markets via its New World Fund.