US-based private equity giant KKR & Co. Inc, on Tuesday, sold off its entire promoter-stake in Max Healthcare Institute Ltd. in the open market for around to Rs 9,400 crore, marking KKR’s largest exit from an Indian firm so far.
On 15 July, Mint first reported that KKR which was a co-promoter and the largest shareholder of Max Healthcare, was looking to sell its entire stake in India’s third-largest hospital chain via bulk deals in the open market.
On Tuesday, KKR, via its affiliate Kayak Investments Holding Pte. Ltd, sold its Max Healthcare shares at Rs 353 each via bulk deals, at a 2.4% discount to Friday’s closing price of Max Healthcare on BSE.
Marquee investors, including US-based New World Find Inc., the Government of Singapore, Monetary Authority of Singapore, Smaller Cap World Fund Inc., WF Asian Smaller Companies Fund Ltd., and BNP Paribas Arbitrage Fund acquired Max Healthcare’s shares from KKR in bulk deals on Tuesday.
KKR and Abhay Soi have been holding 27.54% and 23.09% stake in Max Healthcare as the latter’s two co-promoters. Post the KKR deal, Soi will remain as the sole promoter of Max Healthcare.
“While a little more than 260 million shares were sold via bulk deals, rest 7 million shares held by KKR were sold through ordinary market trades,” said a person close to the development.
After opening 1.3% lower (than Friday’s closing) in the morning, Max Healthcare shares closed with about 10% gains at Rs. 396.70 apiece on BSE.
Gaurav Trehan, partner & 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. We are proud of what Max has accomplished, and are confident in Max’s continued ability to create a positive impact for its patients. We wish Abhay and the entire Max team continued success.”
“This is the largest single block deal by a private equity firm in India. This is also the first instance of over 25% sell down by a PE firm. The sell down of Max Healthcare is also the fastest sale of 47.24% stake in a company which started from last September,” said another person aware of the development.
KKR, in 2018, had acquired shares in Max Healthcare along with Mumbai-headquartered Radiant Life Care Pvt. Ltd, at Rs 80 apiece.
On 29 September, 2021, KKR had sold 84.4 million shares of Max Healthcare for Rs 2,956 crore through open market transactions. The shares were picked up by HDFC Mutual Fund, Veritas Funds Plc and SBI Mutual Fund, among others.
KKR had sold another 10% stake in Max Healthcare for nearly Rs 3,300 crore in March 2022. The buyers included SBI Mutual Fund, Pension Fund Global and Smaller Cap World Fund.
After, KKR’s sell-off, Max Health will undergo a board overhaul since KKR will be vacating its two board seats in the hospital chain company, as part of the terms of the existing share purchase agreement.
To comply with the extant rules for listed company’s board Max Healthcare will be nominating non-independent non-executive members as whole-time directors on its board.
Max Healthcare’s business has rebounded as the pandemic has eased from last year’s peak when healthcare systems were burdened and patients put off elective surgeries for fear of contracting covid. With the number of covid cases down significantly, people are again visiting hospitals for tests, elective procedures and treating other illnesses.
Max Healthcare’s consolidated net profit increased by 12% to Rs 229 crore for the June quarter driven by annual price revision and normalisation of patient footfalls. The healthcare provider had reported a net profit of Rs 205 crore in the June quarter of last fiscal.
Net revenue during the period under review rose to Rs 1,393 crore as compared with Rs 1,322 crore in the April-June quarter of the last fiscal.
Owing to the steadily growing business of Max Healthcare, KKR’s deal attracted a huge interest from buyers.
Max Healthcare’s hospital chain business value has grown multi-fold since KKR-backed Radiant Life Care took over the reins in 2019.
Max Healthcare, which owns 17 super-specialty healthcare facilities across the National Capital Region, Haryana, Punjab, Uttarakhand and Maharashtra, has a market value of Rs.38,465 crore. In addition, Delhi-based BLK-Max Super Speciality Hospital and Nanavati Max Super Speciality Hospital in Mumbai are also run under Max Healthcare.
KKR’s exit from Max Healthcare follow the recent closure of KKR’s $4 billion Health Care Strategic Growth fund in January, which focused on biopharmaceutical, medical devices, healthcare services, life science tools, diagnostics, and healthcare information technology sub-sectors.
Since 2014, KKR has executed several transactions as part of the firm’s healthcare growth equity strategy.