British health insurer Bupa Plc has agreed to increase its stake in its Indian joint venture with Max India Ltd to 49 per cent from 26 per cent for about Rs 191 crore ($29 million).
Max India, led by chairman Analjit Singh, said in a stock market disclosure that its stake in Max Bupa Health Insurance will fall to 51 per cent from 74 per cent.
The UK-based insurer had decided to raise its interest in the Indian health insurance firm earlier this year, following the relaxation of foreign direct investment rules in January.
The deal is subject to approval from the Foreign Investment Promotion Board and the Insurance Regulatory and Development Authority of India.
“Bupa’s stake increase is a clear affirmation of the huge growth opportunity for health insurance in India,” Rahul Khosla, managing director at Max India, said in a statement. “The cash received from the transaction will support growth aspirations of the Max Group as well as for Max Bupa.”
Launched in 2010, Max Bupa is the seventh-largest private health insurer in India and has more than two million customers. It has tie-ups with 3,500 hospitals and healthcare providers, and plans to extend its network of hospitals.
Max India is a diversified Indian group that counts Goldman Sachs, Temasek and IFC among shareholders. The company also has partnerships with Japan's Mitsui Sumitomo Insurance Co and Axis Bank for its life insurance business and with South African firm Life Healthcare for its healthcare business.
In October, Max India said its board approved a plan for Axis Bank to raise its stake in Max Life Insurance Co Ltd from the current 2 per cent. It didn’t specify what stake Axis Bank would hold eventually.
Early this year, Max India said it is splitting into three companies with the existing firm becoming India's first listed company with life insurance as the sole business. The firm will demerge into three business verticals—life insurance, healthcare, and allied businesses such as health insurance.
Deals galore in insurance
The insurance sector has been a hotbed of activity after the government allowed foreign companies to hold a 49 per cent stake in Indian insurers from 26 per cent earlier.
Previously, UK insurer Aviva Plc said it was planning to increase its stake in Aviva India, its local JV with Dabur Group, to 49 per cent.
Also, Aegon raised its stake in Aegon Religare Life Insurance to 49 per cent as part of a larger deal where Religare sold its stake in the firm to media house and existing investor Bennett, Coleman & Co. Ltd.
Australia's Insurance Australia Group Ltd has also said it would increase its stake in a general insurance joint venture with India’s largest lender, State Bank of India, to 49 per cent.