True North to buy entire stake of Max India’s Max Bupa
True North LLP, India’s largest private equity firm is discussion with Max India’s Max Bupa entire stake for Rs 1500 crore. Analjit Singh promoted Max India own’s 51% stake in Max Bupa Health Insurance, a standalone health insurance company. Max India plans to exit from health insurance industry after a decade. True North plans to own entire Max Group stake which is also part of Max Bupa Health Insurance Co Ltd.
The estimated price $220 million is based on ₹755 crore premium during fiscal 2018 and an estimated ₹931 crore for fiscal 2019. Ashish Mehrotra, former Max Life Chief heads the Max Bupa. The Max Group owns 51% majority stake, while Bupa owns 49% permissible stake in Max Bupa.
The company distributes its policies through banks like, HDFC, Kaurur Vysa Bank and Bank of Baroda. When asked to Mohit Talwar, managing director of Max Financial Services Ltd about the one going deal, he stated that he don’t want to comment on it.
Max Bupa earned a profit of ₹278.23 in the first financial calendar of this year, compared to last year, a growth of 11% has been seen. Max Bupa has a paid-up capital of Rs 926 crore.
True North, managing assets worth over $2 billion, had agree to acquire Religare Health Insurance for Rs 1,300 crore. Last year HDFC Ergo, was in advanced talks to acquire Apollo Munich Health Insurance Co. Ltd for an approximate valuation of ₹2,600 crore.
According to the spokesperson from the company, he stated the reason behind exit from Max is its limited ability to grow the business, a disproportionate jump in expenses compared to premium income, promoter’s constraints in infusing capital and staggering losses.
Max India’s holding fell from 74% to 51% after Max India announced that Bupa would raise its stake by 23% in Max Bupa for ₹191 crore in 2015 November.