Speculation rife that Life Healthcare is looking to exit Max Healthcare

Author: George Smith Alexander, Ari Altstedter & Janice Kew

Source: Bloomberg

LIFE Healthcare Group is considering a sale of its stake in India’s Max Healthcare, according to people with knowledge of the matter. They said the company was working with Barclays to explore potential interest in its holding in Max Healthcare, which is one of India’s largest private hospital chains. Life Healthcare and Mumbai-listed Max India each own 49.7 percent of the business. The stake had drawn initial interest from private equity firms, the people said.

According to the people, deliberations are at an early stage, and Life Healthcare could decide to remain invested in the company. India has one of the most underfunded public healthcare systems among the world’s major economies, and as many as 70 percent of patients use private healthcare. At the same time, political pressure to lower costs has hit hospital profits over the past year as the government imposed price controls on coronary stents and knee implants. Shares of Life Healthcare have fallen 15 percent in Johannesburg trading over the past year, giving the company a market value of about R38.7-billion. Representatives for Life Healthcare and Max India did not immediately respond to requests for comment.

A Barclays representative declined to comment. According to Life’s December annual report Life Healthcare has invested a total of R2.9-billion in Max Healthcare. The Indian company has a network of 14 hospitals, spread mostly across the northern part of the country. Max Healthcare’s earnings before interest, taxes, depreciation and amortisation (ebitda) fell five percent to 1.33-billion rupees ($21-million) in the first half of the current financial year. Revenue for the six months ended September 30 rose nine percent to 14.1-billion rupees, affected by regulations and other temporary issues.