KKR sells Max stake in PE’s largest exit

KKR, via its affiliate Kayak Investments Holding Pte. Ltd, sold its Max Healthcare shares at ₹353 apiece, mostly via bulk deals in the open market. The transaction was at a 2.4% discount to Friday’s closing price of Max Healthcare on BSE.

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“While a little more than 260 million shares were sold via bulk deals, the rest 7 million shares held by KKR were sold through ordinary market trades,” a person close to the development said, requesting anonymity.

KKR and Abhay Soi had held 27.54% and 23.09% in Max Healthcare as the healthcare company’s co-promoters. Soi will become the sole promoter of Max Healthcare after the exit of KKR.

After opening 1.3% lower in the morning, Max Healthcare shares surged nearly 10% to ₹396.70 on BSE.

Marquee investors, including US-based New World Fund 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.

On 15 July, Mint first reported that KKR, the co-promoter and 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.

“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,” said Gaurav Trehan, partner and head of KKR India.

“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,” a second person aware of the development said, also declining to be named.

In 2018, KKR acquired shares in Max Healthcare along with Mumbai-based Radiant Life Care Pvt. Ltd, at ₹80 each.

On 29 September 2021, KKR sold 84.4 million shares of Max Healthcare for ₹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 an additional 10% in Max Healthcare for nearly ₹3,300 crore in March. 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 vacate its two board seats in the hospital chain as part of the terms of the share purchase agreement.

To comply with the rules for listed companies, Max Healthcare will nominate non-independent and non-executive members as whole-time directors on its board.

Max Healthcare’s business rebounded as the pandemic 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 net profit increased by 12% to ₹229 crore for the June quarter, driven by annual price revision and normalization of patient footfalls. The healthcare provider had reported a net profit of ₹205 crore in the June quarter of last fiscal. Net revenue rose to ₹1,393 crore from ₹1,322 crore in the year earlier.

Max Healthcare’s hospital chain business value has grown multifold 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 ₹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 followed 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.

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