Insurance News: Analjit Singh raises stake in Max India; acquires 5.29 million shares

Max India chairman Analjit Singh has raised his stake in the healthcare and insurance company by 2%, consolidating his holding in the diversified company to 39%. Singh bought 5.29 million shares in Max India on Wednesday for about Rs 100 crore, at Rs 189.05 a piece.

“The group’s strong fundamentals and growth potential was endorsed by the valuation we received in the recent transactions,”  Singh told ET. “I continue to remain confident of the company’s future growth.”

Shares in Max India gained 2.6% on Wednesday to close at Rs 203.20 on the Bombay Stock Exchange. According to the  takeover law, promoters of listed companies can buy up to 5% stake in a year without having to make an open offer to other  shareholders.

The Rs 8,200-crore Max India has entered into three big transactions at attractive valuations over the past 12 months.

Earlier this month, the company sold its 22-year-old specialty films business to Germany’s Treofan for an enterprise value of Rs  540 crore to focus on its core businesses of healthcare and insurance. In April, Max India brought in Japan’s Mitsui Sumitomo to  replace US-based New York Life Insurance in its life insurance venture, making a windfall gain of Rs 802 crore in the process. In  October last year, the company had sold 26% stake in its hospital chain, Max Healthcare, for Rs 516 crore to South Africa’s Life Healthcare.

Singh has gradually increased his stake in the Delhi-based company over the past five years, buying a cumulative 24 million shares, or 9%, of the current outstanding 265 million shares.

Singh said he intends to increase his stake further through the creeping acquisition route.

Singh’s previous buys include 8 million shares through conversion of warrants at Rs 216.75 in August last year. Two months earlier in the same year, Singh had bought 5 million shares for Rs 180.47 a share. Other deals have been through open market purchases.

Max India has consistently maintained that the company’s shares are undervalued. Analysts say one of the reasons for the discount is the valuation of diversified holding companies, such as Max India, which is lower than the sum of the individual companies because it comes with, what is called in market parlance, a holding company discount.

The company is also mulling a strategy to split the diversified businesses group into its financial and healthcare businesses as part of a restructuring process aimed at realising its full market value, an industry executive had earlier told ET.