Max India to Explore Rewarding Shareholders via Capital Reduction
Max India to offer acquiring up to a maximum of 20% of its outstanding shares from public shareholders at Rs. 85 per share; a premium of 37% to its last closing price of Rs. 62 per share Company to utilize up to Rs. 92 Cr. for the capital reduction exercise The offer comes shortly after the relisting of Max India shares post demerger
Max India Limited, a part of the USD 3 bn Max Group, announced that it would explore a capital reduction program to reward its shareholders, as communicated during the divestment of Max Bupa by the erstwhile Max India. The company plans to offer its public (i.e., non-sponsor group) shareholders the option of taking Rs. 85 per share for up to 20% of their shareholding in lieu of cancelling these shares. Max India, which recently relisted on the Indian bourses on August 28, 2020 after a demerger process has a treasury corpus of over Rs. 400 Cr. created primarily from divestment proceeds of its erstwhile subsidiary, Max Bupa. It intends to utilize up to Rs. 92 Cr. from this corpus for the capital reduction process, while the balance of Rs. 300+ Cr. will be apportioned for growth and other operational expenses. Max India’s shares closed at a price of Rs. 62 per share on September 14, 2020. The cash out through a Capital Reduction process translates to a 37% premium to this price.
The Board of Max India approved the capital reduction exercise earlier today. The proposal will also need to be approved by a special resolution of public shareholders. It will additionally need regulatory approvals including from stock market regulator and NCLT, Mumbai. The approvals process is expected to take about 6-8 months. Post capital reduction, Max India’s outstanding shares will decrease by up to 20%, from 5.38 Cr. to 4.3 Cr.
The Max India sponsor group has communicated its intention of not tendering its shares for capital reduction. Consequently, their shareholding is likely to increase to 51% from the current 41%. They will seek a SEBI exemption from the open offer requirement accordingly. The final quantum of capital reduction will be based on SEBI’s decision on an exemption. Max India is the holding company of Max Group’s Residences for Seniors and Senior Care business, collectively known as ‘Antara’. It also owns a skilling company, ‘Max SkillFirst’. Speaking on occasion, Mohit Talwar, Vice Chairman, Max Group & Managing Director, Max India said, “We had expressed our intent to reward our shareholders at the time we divested our health insurance business Max Bupa. This capital reduction process is a move towards that intent even though capital conservation has become important after the onset of COVID-19 induced economic slowdown. We will still have sufficient growth capital for growth and other expenses.”
Antara, Max India’s flagship operating business is an integrated service provider for all senior care needs. It operates across two categories – Residences for Seniors and Assisted Care Services. Antara’s flagship residential community is located in Dehradun with nearly 200 apartments. Earlier in the year 2020, it launched a new senior living facility in Noida, Sector-150. With 340 apartments in its first phase of development, it will cater to the social, recreational, educational, wellness, and health-related needs of seniors and be ready for living by 2024.