Max Healthcare tops list of healthcare buyout exits in India

KKR completes a blockbuster exit from India’s second-largest hospital chain in five years

In mid-August, private equity giant KKR completed its exit from Max Healthcare, India’s second-largest hospital chain, marking the country’s largest reported healthcare buyout exit in history (Fig. 1).

KKR’s journey began in July 2017 when it invested $200mn for a 49% stake in Radiant Life Care, a hospital management firm, which bought a 49.7% stake in Max Healthcare for $293mn a year later. Radiant was merged into Max Healthcare in June 2020.

The new merged entity, which assumed the name of Max Healthcare, was helmed by restructuring specialist Abhay Soi, who had successfully turned two flagging hospitals around, BL Kapur Memorial Hospital and Nanavati Max Hospital. The merger paved the way for Max Healthcare Institute’s IPO on the Bombay Stock Exchange two months later (August 2020), with KKR retaining a 52% majority stake in the listed firm.

Less than a year after the IPO, KKR began divesting its stake in Max Healthcare as part of its exit plan, reducing it from 47.2% in June 2021 to 27.5% as of June 2022. KKR offloaded its remaining 27.5% stake in August, in a bulk deal to marquee investors, including the Singaporean sovereign wealth fund, GIC, the Monetary Authority of Singapore, BNP Paribas Arbitrage Fund, New World Fund, Smallcap World Fund, and WF Asian Reconnaissance Fund.

The buyout exit will see Soi remain the sole promoter of Max Healthcare, which will undergo a board overhaul to replace vacating KKR-board members.

India’s healthcare: a crown jewel

Private equity-backed buyout deals in India’s healthcare sector have been growing over the past years, drawn by the high growth potential. However, there has been a dip in healthcare buyouts this year, with only $2.1bn invested across 28 deals so far, compared to the record $3.1bn across 42 deals last year (Fig. 2). Nevertheless, since 2020, healthcare deals have constituted the largest proportion of buyout deals in India (Fig. 3).

The Indian healthcare sector is expanding rapidly, with a CAGR of 22% since 2016, driven by rising incomes and insurance coverage, an ageing population, growing demand for quality healthcare, a revival in medical tourism, and favorable policy that spurs foreign direct investments. The hospital industry, which currently accounts for 80% of the total healthcare market, is expected to more than double to $132bn by 2023 from $62bn in the full year of 2017, registering a CAGR of around 17%.

KKR’s latest exit in Max Healthcare appears to be gearing up the Indian hospital buyouts arena for more high-profile deals. Max Healthcare, along with private equity giants Blackstone, CVC Capital, and sovereign wealth fund Temasek, is currently said to be in a buyout race for Care Hospitals from TPG-backed Evercare, in what would be the second largest hospital buyout in the country, according to local media reports. 

KKR, Baring Private Equity Asia, and Temasek are also reported by sources close to the transaction to be considering buying a 21.5% stake in Manipal Hospitals from TPG, in a deal expected to be worth around $4bn.

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