Private equity major Warburg Pincus has sold more than 5.6% stake in insurance and healthcare firm Max India through multiple block deals on Friday. The PE firm, which has been one of the oldest and largest investors in India, sold the stake for Rs 246 crore on BSE and NSE. The stake was sold at a price of Rs 197 per share, which is at a discount to Max India’s trading price of Rs 213.
Before the stake sale, Warburg Pincus held a 22.55% stake in Max India through its entities Madison Holdings, Melany Holdings and Parkville Holdings. The PE major still has around a 17% stake in Max, which amounts to more than Rs 800 crore as per company’s market capitalisation at close of trade on Friday.
Warburg invested in Max India in 2004, pipping ChrysCapital to the deal. It picked up a 29% stake in the firm for Rs 200 crore, subscribing to shares at a price of Rs 200 per unit.
Max India later 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. The PE firm has managed to make nearly 5x from stake sale on Friday, not taking into account the dividend it may have recieved over the years.
Several portfolio companies of Warburg Pincus have become ripe for an exit. As the Indian markets start picking up again, Warburg may look at exiting these investments in next couple of years. Warburg has held to some of its portfolio companies now for 8-10 years. It holds a stake in Rediff, in which it invested in 1999, Moser Baer (2000), WNS (2002) and Kotak Mahindra Bank (2004). All of these companies are listed, either in India or in the United States.
Warburg Pincus raised $15 billion for its latest private equity fund in April 2008. One of its recent investments is $35 million in Gangavaram Port Ltd, India’s deepest port in Andhra Pradesh.
Max India recently raised Rs 150 crore from IFC, the private investment arm of the World Bank, to expand its hospital business. The firm is also raising Rs 400 crore through a Qualified Institutional Placement (QIP). The funds raised through the QIP will be used to expand the group’s insurance company Max New York Life Insurance, a 74:26 joint venture between Max India and US-based New York Life.