Private equity major Warburg Pincus continues to hit the exit button on its old investments in India. After selling out its entire stake in Kotak Mahindra Bank last month, it has now part-exited from its eight-year-old investment in the diversified company Max India, which houses insurance and healthcare businesses of Analjit Singh.

The PE firm sold 3.7 per cent stake for Rs 170 crore ($33.5 million) on Wednesday. Warburg Pincus held a little less than 6 per cent stake in Max India as of December 1, 2011, and its remaining stake is valued at around Rs 100 crore.

Last December, the PE firm sold bulk of its holding in Max India for Rs 308 crore ($59 million). This followed a part-exit in June 2011 when it had sold around 2 per cent stake or over 5 million shares in Max India to the promoters for over Rs 90.65 crore ($20 million).

The stake was sold by Warburg through its entity Parkville Holdings Ltd, at a price of Rs 180 per share, which gave the PE firm a return of 4.5x, according to VCCircle estimates.

While the last transaction in December was also struck at Rs 180 per share, today it has sold shares at Rs 175 a piece. In the latest deal, bulk of the shares was acquired by JM Financial.

Max India scrip rose 3.4 per cent to close at Rs 175 a share on the BSE in a weak Mumbai market on Wednesday.

Given the PE firm’s recent moves, it seems to be making a final exit from the company as its existing investment in the group matures. These part-exits come as back-to-back transactions where Warburg exited its direct holding in the healthcare arm Max Healthcare.

On June 17, Max India said that it was buying out 16.37 per cent stake held by Warburg Pincus in the healthcare arm of Max India for Rs 140 crore, ahead of a proposed rights issue for the hospital chain. Soon thereafter, South Africa’s Life Healthcare Group Holdings said that it would be acquiring 26 per cent stake in Max Healthcare Institute Ltd for Rs 516.5 crore. This investment came at over two times the valuation of Rs 855 crore at which Max India bought the stake of Warburg Pincus, and a little less than 2x pre-money valuation in that transaction.

Warburg first invested in Max India in 2004, pipping ChrysCapital to the deal. It picked up 29 per cent stake in the firm for Rs 200 crore, subscribing to shares at a price of Rs 200 per unit. Max India went for a stock split in 2007 in a ratio of 1:5, which brings down Warburg’s average investment per share to Rs 40.

This means it made around 4.3x in the part-exit today.

Warburg had sold 5-6 per cent stake in Max India in July 2009, for Rs 246 crore, making nearly 5x on its investment.

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