IFC to invest Rs 150 crore in Max India

By Madhav A Chanchani (VCCircle.com)

The company will invest the funds to expand its hospital business, Max Healthcare.

Diversified business house Max India is issuing equity shares in the company to IFC, the private equity arm of the World Bank. Max, which has interests in areas like healthcare and insurance, will issue equity of upto Rs 150 crore on a preferential basis.

The board of directors of Max India will hold a meeting on May 15 to consider the proposal. Private equity major Warburg Pincus holds a 22% stake in Max India.

The funds will be used Max Healthcare Institute Ltd, the groups hospital chain arm, to expand exiting and set up more facilities in National Capital Region (NCR). IFC has previously invested in Max Healthcare. It made a $66.7 million equity and quasi-equity investment in the company in 2007. This time round, IFC is investing in the listed parent company, and seems to be going in for more liquidity.

Max Healthcare will use Rs 150 crore from IFC construct to two greenfield hospitals in NCR - one in Shalimar Bagh and the other in Greater Noida. Both of these will be on completion 300 bed multi-specialty tertiary hospitals, starting with an initial capacity of 150 beds. The funds will also be used for expansion of existing Max facilities in the area. Max is expected to spend Rs 472 crore (~$93 million) on the project.

Max presently operates six hospitals (700 beds) and two specialty clinics in the NCR area. It is also opening a 100 bed hospital in Dehradun. The project will take the total capacity of Max Healthcare to 2,000 beds.

Max India presently has a market capitalisation of around Rs 3,250 crore. As per the present market cap, IFC may get a 4-5% stake in the company. The stock closed at Rs 146.75 on Tuesday. Max India has a presence in areas like life insurance (a JV with New York Life),

healthcare, clinical research, specialty plastics and health staffing.