True North Managers Llp, a Private equity firm is close to buying out Analjit Singh-promoted Max India Ltd’s entire 51% stake in standalone health insurer Max Bupa Health Insurance Co. Ltd, according to sources.
Max India will exit the health insurance business a decade after it entered as a promoter. This will mark the first exit by an Indian promoter in the domestic health insurance industry.
“The new joint venture will have True North as the majority partner, while British partner Bupa will continue to hold 49% in Max Bupa. True North will buy Max India’s 51% stake in Max Bupa at around Rs. 1,000 crore,” said the first person cited above, requesting anonymity.
The deal would value Max Bupa at around Rs. 2,000 crore, this person said.
“This valuation is based on Max Bupa’s gross underwritten premium of around Rs. 755 crore during fiscal 2018 and an estimated Rs. 931 crore for fiscal 2019,” this person said. It assumes that gross underwritten premium will grow more than 23% this fiscal and thus values the enterprise at 2.2 times gross underwritten premium.
Max Bupa earned a net premium of Rs. 278.23 crore in the fiscal first half through September, an 11.85% increase from last year’s Rs. 248.75 crore. Operating expenses during the period increased to Rs. 156.26 crore from Rs. 131 crore during April-September 2017. The company’s assets were estimated at Rs. 133.45 crore at the end of September, compared with Rs. 110.42 crore a year earlier.