Life sells its Indian business for R3.7bn

By Sandile Mchunu Time of article published Jun 25, 2019

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DURBAN - JSE-listed private healthcare group Life Healthcare has exited its Indian business, concluding the talks that have lasted for six months by disposing of its 49.7percent stake in India's Max Healthcare for R3.7 billion.

The group said it had successfully concluded a share purchase agreement with Radiant Life Care, which was entered on December 24 last year.

Radiant acquired the stake for 80 rupees a share, which equals R16.52 a share, and this equates to R3.7bn of net proceeds received after costs, hedges and taxes, which resulted in a profit on disposal of approximately R900million.

Chief executive Dr Shrey Viranna said all conditions precedent to the agreement had been fulfilled and proceeds of the sale had been received.

“The sale of Max Healthcare aligns to our realigned growth strategy, specifically expanding across the healthcare continuum in South Africa and leading in diagnostic imaging internationally,” Viranna said.

Life Healthcare said it intended to use the funds to settle its debt. It initially acquired a 26percent stake in Max Healthcare in 2012 and it further increased the stake to 49.7percent in two transactions thereafter.

The deal to acquire Max Healthcare is backed by leading investment firm Kohlberg Kravis Roberts (KKR).

KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic manager partnerships that manage hedge funds.

Viranna said earlier this year that Life Healthcare’s strategy was evolving away from the delivery of acute hospital care in emerging markets towards a much deeper approach to integrated healthcare, leveraging off diagnostics capability of Alliance Medical Group.

“The conclusion of the Max Healthcare transaction will further enable this strategy, and allow Life Healthcare to focus on its core operations in South Africa, the UK, Poland and Western Europe,” Viranna said in January.

Life Healthcare reported Max Healthcare in its half-year results to end March as assets held for sale.

Life Healthcare has struggled to make its impact in India as the country has one of the most underfunded public healthcare systems among the world’s major economies, with around 70percent of patients using private healthcare.

For the six months to end March 2018, Max Healthcare reported disappointing results, with the business negatively impacted by the Shalimar Bagh incident in December 2017, resulting in a knock-on effect on the balance of the Delhi business. The group also faced an increased regulatory environment, which negatively impacted its earnings before interest, tax, depreciation and amortisation margins during the period, resulting in a R67m.


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