Max India, the Delhi-based company with interests in healthcare, insurance and telecom, have secured another round of major funding from a private equity arm of Goldman Sachs. The company's board has approved a proposal to raise $115 million (about Rs 540 crore) by the global investment bank, according to a report in Business Standard, which quoted a stock exchange filing.

The company will dilute 9.4% stake post money, valuing Max India at $1.2 billion (about Rs 5,743 crore). According to the report, Max India promoter Analjit Singh would also pump in money during the course of one year to retain his current stake 34%. "I don’t want to dilute my stake. I will be trying to increase my shareholding in one year,” Singh has been quoted as saying by Business Standard.

The funds will be used to expand the company's interests in insurance, healthcare and specialty plastics businesses, the report added. The investment will be from the $20.3 billion GS Capital Partners VI fund formed in 2007 to invest in a broad range of industries globally.

Goldman Sachs will get a seat on the board, though it will not have any affirmative rights but only with information rights, the report added quoting an official. 

Max India will issue fully and compulsorily convertible debentures (FCDs) of the face value of Rs 867 each amounting to a total of Rs 540 crore to Goldman Sachs, which will carry a coupon rate of 12% a year. This will have to be converted within 15 months from the date of allotment into four equity shares of Rs 2 each at a premium of Rs 214.75 per share.

Singh will be issued 2 million warrants of the face value of Rs 867 each for Rs 173.4 crore, representing about 3% of the post-issue share capital of the company on conversion. Each warrant will be converted into 4 equity shares of Rs 2 each at a premium of Rs 214.75 per share within 18 months.

About half of this investment – Rs 87 crore – will be paid upfront by Singh, though the stipulated minimum upfront payment required is just 25 per cent, BS report added.

The company already has a treasury corpus of Rs 330 crore, and with Goldman Sachs and Singh's new investment, the corpus will reach about Rs 1,000 crore. These funds are expected to meet its funding requirement for the next two years.

The report added that about Rs 520 crore would be invested in life insurance firm Max New York life, about Rs 200 crore in new health insurance business, and Rs 150 crore for the healthcare business.

To put the various fund raisings by Max India in context, in May 2009, International Finance Corporation, the PE arm of World Bank, invested Rs 150 crore in the company. This inevstemnt was mainly done to expand the group's hospital chain Max Healthcare Institute Ltd in National Capital Region (NCR). IFC had previously invested in Max Healthcare when it put in $66.7 million equity and quasi-equity investment in the company in 2007.

Private equity fund Warburg Pincus had in 2004 invested about Rs 200 crore in Max India to pick up 29%. In July 2009, Warburg had sold about 5.6% stake in a partial exit to raise about Rs 246 crore.

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