Max India promoters may plan preferential issue

Promoters of Max India Ltd are likely to come out with a preferential equity issue following Warburg Pincus' open offer for additional 20 per cent holding in the Delhi-based company. The idea is to ensure a floating stock of 20 per cent post open offer, stated senior executives at Max India.

Warburg Pincus group and associates' offer is likely to attract sizable percentage of shareholders since the scrip price of Max India is quoting at around Rs 180, while the open offer is at Rs 200 per share. The offer opens on July 20 and closes on August 18.

Warburg Pincus' offer follows its acquisition in late May of 29 per cent holding at Rs 200 per share in Max India for a total consideration of Rs 200 crore. The private equity investor had acquired the stake at a premium of Rs 60 per share as the share price was on May 23 quoting at Rs 140 per share.

The fresh capital infusion of Rs 200 crore in Max India was with an idea to meet the company's planned investment in the lines of life insurance and healthcare businesses.

Adhering to the takeover norms as laid down by the Securities and Exchange Board of India (Sebi), Warburg Pincus is making an open offer to acquire an additional 20 per cent holding in the company. This could take its holding to 49 per cent should the investing public choose to participate in the offer.

In the eventuality of Warburg Pincus' holding exceeding that of the promoters, as per an internal agreement, the promoters will buyback the equity at the same price, said Analjit Singh, chairman of Max India.

In addition, the promoter group of Max India propose to come out with a preferential equity issue following Warburg Pincus' open offer, with the idea to ensure a 20 per cent floating stock post offer.

Parkville Holdings Ltd and Ensley Ltd "" Warburg group entities "" have bought 68.57 lakh Max India shares. Warburg Pincus is the largest international private equity investor in India with domestic investments in excess of $ 850 million.

The price of the scrip today rose to touch a high of Rs 181.80 on the Bombay Stock Exchange (BSE) before closing at Rs 181.55.