Picture: ISTOCK
Picture: ISTOCK

Life Healthcare Group, the second-largest private hospital owner in SA, is considering a sale of its stake in India’s Max Healthcare, people with knowledge of the matter said.

The Johannesburg-based company was working with Barclays to explore potential interest in its holding in Max Healthcare, which is one of India’s largest private hospital chains, the people said.

Life Healthcare and Mumbai-listed Max India each own 49.7% of the Indian business, company filings show.

Life Healthcare could seek about R5bn for its stake, one of the people said, asking not to be identified because the information is private.

The stake had drawn initial interest from private equity firms, the people said.

Deliberations were at an early stage, and Life Healthcare could decide to remain invested in the company, according to the people.

India has one of the most underfunded public healthcare systems among the world’s major economies, and as much as 70% of patients use private healthcare.

At the same time, political pressure to lower costs has hit hospital profits over the past year as the government imposed price controls on coronary stents and knee implants.

Shares of Life Healthcare have fallen 15% in Johannesburg trading over the past year, giving the company a market value of about R38.7bn.

Representatives for Life Healthcare and Max India did not immediately respond to requests for comment. A Barclays representative declined to comment.

Life Healthcare has invested a total of R2.9bn in Max Healthcare, according to Life’s annual report released in December.

The Indian company has a network of 14 hospitals, spread mostly across the northern part of the country.

Max Healthcare’s earnings before interest, taxes, depreciation and amortisation (ebitda) fell 5% to 1.33-billion rupees ($21m) in the first half of the current financial year.

Revenue for the six months ended September 30 rose 9% to 14.1-billion rupees, affected by regulations and other temporary issues, according to a filing.