New Delhi, June 6
PRIVATE equity fund Warburg Pincus has decided to invest Rs 115 crore in Max Healthcare Institute Ltd for acquiring 28.75 million shares at an issue price of Rs 40 per share.
While the fund will directly hold 23 per cent in the healthcare company, its 28.7 per cent stake in parent company Max India will take its total effective holding to 43 per cent.
With this second round of funding, the private equity fund's total investment in Max Healthcare stands at Rs 140 crore.
During the first round that concluded in January this year, Warburg Pincus had invested Rs 25 crore for a 13.8 per cent stake in the company.
Speaking to newspersons after the board meeting, Mr B. Anatharaman, Joint Managing Director of Max India, said, "With this infusion, we have effectively concluded our five years investment plan for the healthcare business and will not look for more funding in the near future."
The total project cost for six hospitals in the National Capital Region (NCR) has been envisaged at Rs 600 crore, of which the equity component is Rs 325 crore and the total debt is Rs 275 crore.
He said that the business is likely to see a healthy revenue trend with the current fiscal year closing at an estimated Rs 147 crore.
The business is expected to break even in 18-24 months time and revenues are likely to peak at Rs 480 crore in 2010-2011.
Max India also announced today that following the FIPB clearance Warburg Pincus has completed its balance investment of Rs 119 crore in the parent company taking the total investment to Rs 200 crore.
With these infusions, the private fund has invested Rs 340 crore in the Group over the last six months.
Mr Anatharaman has predicted a bright future outlook for the insurance venture, Max New York Life (MNYL), clinical research company Neeman Medical International and the biaxially-oriented polypropylene (BOPP) business.
For MNYL, he said that the sum insured in force for the quarter ended March 2005 stood at Rs 16,511 crore compared to Rs 11,028 crore recorded during the same period last year.
The BOPP business is also expected to grow, if the Government permits foreign direct investment in the retail sector. "There will be more demand for BOPP once retailing is thrown open," he added.
On the clinical research business, Neeman hopes that revenues will grow from $5 million to $50 million over next three years.
While the company has a presence in Latin America and the US, the Asian business has already turned profitable with margins exceeding 35 per cent.
It has recently tied up with the Hyderabad-based Indo-American Cancer Hospital and Mediciti Hospital for physicians and research sites. Some of the orders included clinical research work for a dermatological drug for Wyeth and another ophthalmologic product for Bausch and Lomb.