The company plans to offer its public shareholders the option of taking Rs 85 per share for up to 20 per cent of their shareholding in lieu of cancelling these shares.
The company said it "intends to utilize up to Rs 92 crore from this corpus for the capital reduction process.
Max India, which is mainly into senior living housing business, on Tuesday said its board has approved a capital reduction programme under which the company will buy back equity shares worth up to Rs 92 crore from public shareholders. The company plans to offer its public shareholders the option of taking Rs 85 per share for up to 20 per cent of their shareholding in lieu of cancelling these shares, Max India said in a statement. Max India, which got relisted on the bourses on August 28, has a treasury corpus of over Rs 400 crore primarily from divestment proceeds of its erstwhile subsidiary Max Bupa.
The company said it “intends to utilize up to Rs 92 crore from this corpus for the capital reduction process, while the balance of Rs 300+ crore will be apportioned for growth and other operational expenses”. Shares of Max India, which is part of the USD 3 billion Max Group, closed at Rs 62 per share on September 14, 2020. The cash out through a capital reduction process translates to a 37 per cent premium to this price. “The board has approved the capital reduction exercise. 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 approval process is expected to take about 6-8 months,” the statement said.
The capital reduction programme is aimed at rewarding its shareholders, as communicated during the divestment of Max Bupa by the erstwhile Max India, the company said. Post capital reduction, Max India’s outstanding shares will decrease by up to 20 per cent, from 5.38 crore to 4.3 crore. “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 per cent from the current 41 per cent,” the statement said.
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 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. Mohit Talwar, Vice Chairman, Max Group and 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 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 this year, it launched a new senior living project in Noida.