Max India has divested its entire 51% stake in Max Bupa Health Insurance to private equity firm True North Fund VI in an all cash transaction valued at more than Rs5.1bn ($71.54m).
The proposed transaction puts Max Bupa at an enterprise valuation of Rs10.01bn ($140.42m).
Upon completion of the transaction, True North will nominate directors on Max Bupa’s board, while Max India’s nominated directors will resign.
Bupa, the UK-based healthcare group and existing joint venture (JV) partner in Max Bupa, will continue to play an active role in the health insurance JV.
As per the terms of the agreement, the use of the Max brand will be phased out over a period of two years and replaced with a suitable name, however, the Bupa brand name will continue.
Commenting on the deal, Max Group founder and chairman Analjit Singh said: “We are rebalancing our portfolio of businesses with a much sharper focus on growing shareholder value, and this transaction is a step towards that journey.
“We are sure that Max Bupa will continue its excellent performance under its new shareholders, ably supported by the founding JV partner Bupa.”
Max Group vice chairman designate Mohit Talwar said: “Our selection criteria for the potential investor in Max Bupa was based on a shared vision for the company, alignment with our JV partner Bupa, and a commitment to invest in the long-term growth of the company.”
True North partner Divya Sehgal said: “As the health insurance sector grows in India, True North is looking to build the most trusted brand in health insurance in the country.
“We believe Max Bupa is one of the best positioned brands and businesses in the sector. Our priority is to work seamlessly with both teams at Max and Bupa through this transition towards the benefit of Max Bupa’s customers, employees and stakeholders.”
The transaction is pending agreements completion and approval from shareholders of Max India besides regulatory bodies. It is scheduled to be completed within FY2020.