KKR-Radiant buys 49.7% stake in Max Health for $293 million

MUMBAI: South Africa-based hospital group Life Healthcare has sold its entire 49.7% stake in Max Health to Mumbai-headquartered Radiant Hospital backed by private equity player KKR for $293 million, a move that makes Radiant a significant player in the highly competitive healthcare space. KKRRadiant will be buying more than 266 million shares in Max Healthcare at Rs 80/share.

“The company will initially use the net disposal proceeds to settle debt as well as to invest in growth opportunities in its core markets,” the group said in a statement. Max Healthcare runs Max Hospitals, the country’s third-largest such chain with a capacity of 2,500 beds at 14 facilities.

The Johannesburg-based hospital chain had put up its stake up for sale earlier this year as the group decided to exit its non-core market and settle its debt and mandated Barclays to run a formal process that saw interests from rival PE firms like Bain Capital.



Life Healthcare in 2012 had acquired 26% stake in the Max for Rs 516 crore, subsequently increasing its investment in 2014 by investing an additional Rs 716 crore in the company.

Life Healthcare and Max India each own 49.7% of Max Healthcare, a subsidiary of Max India. The promoters, Singh’s family, own 40.97% of the listed Max India, which also houses the Max Bupa healthcare insurance joint venture and Antara, a senior-living platform. With this acquisition, Radiant will be in the league of likes of Apollo Hospital and IHHFortis.

For KKR-Radiant their ambition to expand in India's healthcare sector has finally fructified, after the duo made an aggressive but an unsuccessful attempt to buy out the troubled Fortis Hospital, which was bought over by Malaysia-based IHH. Radiant’s existing facilities include BLK Super Speciality Hospital in New Delhi and the Nanavati Super Speciality Hospital in Mumbai.

ET in its January 13th edition was the first to report that KKR-Radiant are in a preliminary stage to pick up the stake of Life Healthcare, which held a 49.7% equity in Max Healthcare. On Wednesday, shares of Max India closed at Rs 81, marginally down. For the June quarter ending 2018, Max India reported a net revenue ofRs 14.47 crore and a net profit of Rs 1.3 crore.

KKR is also an investor in Singh’s financial services company, having bought 10% in Max Financial in 2006, which is Singh’s listed life insurance company, and have had lending relationships from even before.

Earlier in January of this year KKR backed Singh with a fresh line of ‘flexible partnership capital’ of around Rs 2,000 crore ($315 million), to repay expensive debt, seven years after backing him first.

The Indian healthcare sector is witnessing unprecedented consolidation. The lack of investment by government has provided an opportunity for private players to expand in India for the $60 billion healthcare industry.

Multi-speciality hospitals especially have become a ripe acquisition target as government regulations, pricing pressure on medicines and depleting profitability has made it unviable for several of the promoters to run the ship.