India's True North acquires Max Bupa for $72m
True North has acquired a 51% stake in Max Bupa Health Insurance, a joint venture between multinational insurance giant Bupa Group and Indian conglomerate Max India, for INR5.1 billion ($72 million).
The transaction values Max Bupa at INR10 billion and will see Max India divest its entire shareholding in the company, according to a statement. Bupa will retain its 49% stake and the company will continue to use the Bupa branding, while the Max India brand will be phased out over the next two years. The sale will run independently of and parallel to the acquisition of Max Healthcare, Max India’s hospital subsidiary, by KKR-backed Radiant Life Care.
Max Bupa claims to be the fourth largest standalone health insurance provider in India, offering individual and family-oriented policies for all age groups. Its gross written premiums (GWP) for the year ended March 2018 came to INR7.5 billion, up 27% from the previous year – a growth rate that outpaced the 22% industry average. Total underwriting revenue grew from INR5.4 billion to INR5.8 billion over the same period, while the company went from a INR37 million net loss to a net profit of INR228 million.
The deal marks the second PE-backed control deal in India’s health insurance sector, following last year’s acquisition of Star Health and Allied Insurance by a consortium including WestBridge Capital and Madison Capital. With only 34% of the country’s population having some form of health insurance in 2017 and the growing incidence of chronic diseases like cancer and diabetes, demand for insurance is expected to grow. Industry GWP is projected to rise from INR423 billion in 2018 to INR515 billion by 2020.
This is also True North’s second attempt at a control deal in the space. It led a consortium in 2017 that agreed to buy a majority stake in Religare Health Insurance for INR10.4 billion, but the deal has reportedly faltered, with True North suing the parent company Religare Enterprises last year to prevent it selling shares to another investor.
True North, formerly India Value Fund Advisors, is currently raising its sixth fund. The vehicle launched in 2017 with a hard cap of $1.1 billion, though this was subsequently reduced to $990 million. Healthcare-related investments include the acquisition of Glenmark Pharmaceuticals’ Indian orthopedics and pain management business last year.
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