The proposed transaction is an all-cash deal and it values Max Bupa at an enterprise value of Rs 1,001 crore.
Max India said the deal has been at a consideration of Rs 510.51 crore, which the company will receive at the time of completion of the proposed transaction.
At the conclusion of the transaction, True North will nominate directors on Max Bupa's board, while Max India's nominated directors will step down, a joint statement by True North and Max India said.
Bupa, the existing JV partner in Max Bupa, remains committed to the joint venture and will continue to play an active role in the company as before through its board positions and knowledge exchange initiatives.
The use of the Max brand will be phased out over a period of two years and replaced with a suitable name. The Bupa brand name will continue as before, it added.
"The transaction will lead to a cash inflow of Rs 511 crore for Max India. The company intends to utilise the proceeds to invest in both existing and new business opportunities which are currently under evaluation," the statement said further.
Commenting on the transaction, Analjit Singh, Founder & Chairman, Max Group, said, "We are rebalancing our portfolio of businesses with a much sharper focus on growing shareholder value, and this transaction is a step towards that journey. We are sure that Max Bupa will continue its excellent performance under its new shareholders, ably supported by the founding JV partner Bupa."
KPMG Corporate Finance was the lead financial advisor to Max India in this bilateral transaction with True North.
AZB & Partners and Khaitan & Co. acted as legal advisors to Max India and True North respectively.
"Our selection criteria for the potential investor in Max Bupa was based on a shared vision for the company, alignment with our JV partner Bupa, and a commitment to invest in the long-term growth of the company," said Mohit Talwar, Vice Chairman Designate, Max Group.
Divya Sehgal, Partner, True North, said as the health insurance sector grows in India, True North is looking to build the most trusted brand in health insurance in the country.
"We believe Max Bupa is one of the best positioned brands and businesses in the sector. Our priority is to work seamlessly with both teams at Max and Bupa through this transition towards the benefit of Max Bupa's customers, employees and stakeholders," Sehgal said.
The transaction is subject to execution of definitive agreements and approval from shareholders of Max India apart from regulatory bodies and is expected to be completed within FY 2020.
'Bupa is committed to the Indian health insurance market and sees exciting opportunities for growth over the coming years. We look forward to working with our new partner True North to grow the Max Bupa business," said Simeon Preston, CEO, International Markets, Bupa.
The process of conclusion of Max Bupa's divestment will run in parallel and independent of the recently announced composite transaction involving demerger of Max India and the merger of Max Healthcare with Radiant-KKR.
True North (formerly known as India Value Fund Advisors IVFA) was established in 1999 with a focus on investing in and transforming mid-sized profitable businesses into world-class industry leaders.
True North has successfully launched six separate investment funds with a combined corpus of over USD 2.8 billion including co-investments.
Max Bupa is a joint venture between Max India Ltd and the UK based healthcare services expert, Bupa.
In a separate filing, Max India said its board at its meeting held on February 26, 2019, has appointed Sharmila Tagore as an independent director.
Shares of Max India closed 2.61 per cent higher at Rs 82.50 on the BSE.
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.