True North to acquire 51% stake in Max Bupa Health Insurance for Rs 511 cr

Private equity (PE) investor True North will acquire a 51 per cent  stake in Max Bupa Health Insurance Company for Rs 511 crore from the Delhi-based Max Group, which is reorganising its businesses.

The all-cash transaction values Max Bupa at Rs 1,001 crore. Bupa, existing joint venture partner in Max Bupa, stays invested; it will continue to play an active role in the company as before, went a joint statement from buyer and seller.

At the transaction's conclusion, True North will nominate directors on Max Bupa's Board; Max India's nominated directors will step down. Use of the Max brand will be phased out over two years. The Bupa brand name will continue.

KPMG Corporate Finance was the lead financial advisor to Max India in this bilateral transaction with True North. AZB & Partners and Khaitan & Co were legal advisors to Max India and True North, respectively.

The transaction is subject to execution of definitive agreements and approval from the shareholders of Max India, apart from regulatory bodies. It is expected to be completed within 2019-20.

The process will run in parallel and independent of the recently announced composite transaction involving demerger of Max India and the merger of Max Healthcare with Radiant-KKR.

True North, earlier known as India Value Fund Advisors, has invested in a little more than 40 companies, through six investment funds with a combined corpus of $2.8 billion (Rs 23,000 crore). Over the years, True North has made productive investments across the financial services and health care sectors, of Rs 5,700 crore.

It had agreed to buy 80 per cent in Religare Health Insurance for Rs 1,300 crore in 2017 but Religare withdrew the deal after a court restrained the promoters from selling it in 2018. 

Divya Sehgal, partner at True North, said: ‘‘As the health insurance sector grows in India, we are looking to build the most trusted brand in the country. We believe Max Bupa is one of the best positioned in the sector.''

"Our priority is to work seamlessly with both teams at Max and Bupa through this transition," he added.

Simeon Preston, the chief executive at Bupa for international markets, said: ‘‘Bupa is committed to the Indian health insurance market and sees exciting opportunities for growth. We look forward to working with our new partner, True North.''

Analjit Singh, founder and chairman of Max Group: ''We are rebalancing our portfolio of businesses, with a much sharper focus on growing shareholder value. This transaction is a step on that journey. We are proud of the high quality organisation we have created in Max Bupa and are sure this performance will continue.''

Mohit Talwar, vice-chairnan designate at Max Group, added: ‘‘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. In this context, we are fortunate to hand over our controlling stake to True North.''