The New York-based private equity firm is in talks with strategic and equity investors, including private equity firms, family offices, and wealthy individuals, to sell its 27.54% stake in the hospital chain, one of the two said on condition of anonymity. “If a premium of 20-30% is offered to the current valuation, it could be sold off entirely," the person said, adding the PE major may sell its stake in parts through large bulk deals in the open market if it fails to find a buyer at the desired valuation.
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.
“This is why there is a huge interest from strategic buyers and large business groups, who can see the pace at which Max Healthcare is growing," the person said.
Max Healthcare’s hospital chain business value has grown multifold since KKR-backed Radiant Life Care took over the reins in 2019.
A KKR spokesperson declined to comment.
“KKR had bought the stake in Max Healthcare at ₹80 per share, and it has seen its investment grow manifold since the takeover. So investors are sitting on significant gains," said the first person, explaining KKR’s decision to exit Max Healthcare.
On Monday, Max Healthcare’s shares ended trading at ₹374.75 on BSE.
According to a second person, billionaire Gautam Adani is also considering buying KKR’s stake in Max Healthcare. However, Adani Group has not formally approached KKR or Max Healthcare, the two people said.
A spokesperson for Max Healthcare said, “We would like to state that the promoters of Max Healthcare are not in discussions with any Adani Group entity for a stake sale."
According to the Securities and Exchange Board of India’s takeover norms, the buyer of KKR’s stake will also have to launch a public offer for Max Healthcare’s public shareholders.
Abhay Soi, the founder of Radiant Lifecare, is the other promoter of Max Healthcare, with a 23% stake. KKR holds its stake through its affiliate, Kayak Investment’s Holding Pte. Ltd. If the deal goes through, it may be KKR’s largest exit deal in India.
Max Healthcare, which owns 17 super-specialty healthcare facilities across the National Capital Region, Haryana, Punjab, Uttarakhand and Maharashtra, has a market value of ₹36,356 crore. In addition, Delhi-based BLK-Max Super Speciality Hospital and Nanavati Max Super Speciality Hospital in Mumbai are also run under Max Healthcare.
If Adani Group’s plan succeeds, Max Healthcare could be brought under Adani Health Venture, a newly launched venture by Adani Group. The group has readied a war chest of at least $4 billion for investments in the healthcare industry.
Any acquisition deal with Max Healthcare may cost Adani Group $2.5-3.5 billion, including a premium to the current market value of Max Healthcare.
An email sent to Adani Group did not elicit any response.
To be sure, KKR has been diluting its stake in parts in Max Healthcare over the past year.
In March, Kayak Investment sold 10% of Max Healthcare for nearly ₹3,300 crore. However, since then, the valuation of Max Healthcare has increased significantly. In September, KKR sold Max Healthcare’s shares worth ₹2,956 crore through multiple bulk deals on the stock exchange.
This was three years after KKR and Mumbai-based Radiant bought a 49.7% stake in Max Healthcare from South Africa-based Life Healthcare Group Holdings for about ₹2,120 crore.
Life Healthcare Group Holdings was an equal joint venture partner in Max Healthcare with business tycoon Analjit Singh-promoted Max India.
KKR’s exit plans 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.
