South Africa's Life Healthcare will invest up to Rs 794 crore to up stake in its JV with diversified group Max India, a move that would lead to equal shareholding among the partners in Max Healthcare.
According to the pact, Max India would divest up to 13.3 per cent of existing equity stake held in the JV (Max Healthcare) at Rs 67.50 per equity share, for an aggregate consideration of upto Rs 356 crore in favour of Life Healthcare.
Further, Max Healthcare will make fresh equity issuance to the South African partner on a preferential basis, for an aggregate consideration of up to Rs 397 crore.
Currently, Max India's stake in Max Healthcare stands at 65.86 per cent, Life Healthcare holds 26 per cent while International Finance Corporation (IFC) holds 7.5 per cent. The balance 0.64 per cent is held by the ESOP holders.
The actual amount of investments by Life Healthcare will depend on IFC's decision on its stake. The South African company will invest about Rs 41 crore for this.
"Max India and Life Healthcare's joint venture has evolved into a mutually beneficial partnership with a clear meeting of minds on critical decisions such as business development, growth strategies and talent management. Life Healthcare will invest upto Rs 794 crore for this," Max India MD Rahul Khosla told reporters here today.
The deal is expected to close by August-end or the first week of September, Khosla added.
Post the deal, Max India and Life Healthcare would each hold 46.4 per cent stake in the healthcare joint venture.
"The fund received from the stake sell would help to reduce debt in Max Healthcare, which currently stands at Rs 750 crore and also create a war chest for expansion as well as other activities," Khosla said.
Post the transaction, both the partners will have equal representation on the MHC board, but the Chairman would be appointed by Max India, he added.
"At the same time the brand (MHC) would also remain unchanged," Khosla said.
In January 2012, Life Healthcare had invested Rs 516.5 crore to acquire 26 per cent stake in Max Healthcare.
Life Healthcare is the second largest private hospital operators in South Africa. It currently owns and operates 63 facilities with 8,322 beds over seven South African provinces and Botswana.
"India is a very important market for us. Our relationship with Max had been very constructive," Life Healthcare CEO Andre Meyer said.
Max Healthcare operates 12 hospitals in North India, with a focus on high end tertiary and quaternary care. Max India has interests in insurance, healthcare and health insurance.
Max India shares today closed at Rs 317.50 apiece on the BSE, down 1.04 per cent from its previous close.
