Life Healthcare (LHC), a South African healthcare $2 billion major, has finalized the investment of Rs.516.5 crore in Max Healthcare (MHC), one of India’s leading private healthcare provider, at Rs.50.55 per share. It will acquire 26 per cent stake in an all cash transaction which puts the enterprise value of MHC at over Rs.2,300 crore. This would be the largest FDI transaction in the Indian healthcare space. The deal would provide LHC a platform to participate in the high growth Indian private healthcare space.


The deal is subject to approval of the Board’s of LHC and MHC and diligence. Life Healthcare will have the right to nominate two directors on the board of Max Healthcare. It will also have consultative and informative rights.


MHC is a subsidiary of Max India, one of India’s leading multi business corporates with interest in Life Insurance, Healthcare and Health Insurance. Max India is listed on BSE and NSE. MHC’s other shareholder includes IFC, Washington.


Max Healthcare, which operates 8 hospitals in the Delhi-NCR region and, is in the middle of organic expansion, opening 4 new hospitals in Delhi-NCR and North India within the current year, in the process almost doubling its capacity to 1,900 beds. It recently started 2 of these hospitals in Mohali and Bathinda, Punjab. Max India will use the stake sale proceeds largely to fund MHC’s current expansion, and to optimize its cost of funds, leading to an improved financial performance.


MHC’s revenue in first quarter ended June 2011 was Rs.186 crore, a growth of 19 per cent. Its EBITDA in the same period grew by 133 per cent to Rs.11 crore.


Life Healthcare is the second largest private hospital operators in South Africa. It currently owns and operates 63 facilities with 8322 beds in a comprehensive geographic spread over seven South African provinces and Botswana. It is also a leading provider of acute rehabilitation and mental health services in the country.


Life Healthcare is a highly profitable company with cutting edge practices in expertise in the areas such as Nursing & Training, IT & Information, and Cross Facility Systems Standardization etc. It will work closely with MHC to transplant its expertise in these areas.