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Jhunjhunwala backed Star Health Insurance files IPO worth 3000 cr

28 August 20235 mins read by Angel One
Jhunjhunwala backed Star Health Insurance files IPO worth 3000 cr
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An Overview of the IPO

Chennai-based Star Health Insurance, India’s first and largest private standalone health insurance provider, is preparing a Dalal Street launch in 2021, backed by ace investor Rakesh Jhunjhunwala and private equity companies Westbridge Capital and Madison Capital. The firm’s IPO plans follow a dramatic rise in demand for health insurance policies and expanded adoption following the pandemic’s outbreak.

Star Health Insurance is a fast-growing company with a market capitalization of more than $3 billion. The company intends to raise about Rs. 3000 crores via the proposed IPO, but the exact amount has yet to be determined, and a final decision will be made later. The current intention is to file the DRHP (draft red herring prospectus) with the Securities and Exchange Board of India (SEBI) in May.

The investment banks hired by the company for the IPO are Kotak Mahindra Capital, Citi, Axis Capital, ICICI Securities, and BofA Securities. As part of the proposed IPO, the firm’s core investors are likely to dilute a minority interest. It would be a mix of a new share issue and a public offering.

Star Health is a high-quality company that will set a high standard. Furthermore, India has no publicly traded retail health insurance companies. Max Bupa, ICICI Lombard, HDFC Ergo, Bajaj Allianz, and New India Assurance are among Star Health’s competitors in the market.

Shift In Power

Safecrop Holdings Pvt. Ltd, a group of investors led by WestBridge AIF, Rakesh Jhunjhunwala, and Madison Capital, signed definitive agreements with Star Health & Allied Insurance Company Ltd shareholders in August 2018 to acquire 90 percent of the company. Star Health Investments Pvt. Ltd. and funds controlled or advised by ICICI Venture, Tata Capital, and Apis Partners were among the existing shareholders at the time.

“Through creativity, perseverance, and professionalism, Star Health’s management has risen to the top of the private health insurance industry. I agree that health insurance is an important tool for all citizens in achieving financial security. I am honoured to be affiliated with Star Health and feel that it is ideally suited to meet the country’s health insurance needs.” Following the acquisition, Rakesh Jhunjhunwala said.

Progress of the Pursuit So Far

V Jagannathan (who previously headed United India Insurance) created Star Health in 2006 to provide health insurance, overseas mediclaim, and personal injury policies. The business, which is a market leader in the standalone health insurance sector, had a 52 percent market share as of October 2020.

Its main focus is on retail health insurance, where it has a 30% market share. With a market share of 4.36 percent as of August 2020 and a network of more than 9,500 hospitals, it is also the country’s fourth-largest private non-life insurer. It had more than 12,800 employees and 640 branch offices throughout India, according to its website, and had underwritten a gross written premium of Rs.6865 crore in FY 2019-20.

By the end of FY21, the company wants to have a premium of Rs 10,000 crore. The company had submitted 45,000 COVID-19 claims totaling Rs. 500 crores, with around 80% of them resolved. Peer Health had also sold 400,000 Corona Kavach and Corona Rakshak policies, which are the normal coronavirus-specific covers, prior to the regulator IRDAI’s specific guidance. The insurer underwrote gross direct premium of about Rs 5,600 crore between April and November 2020. It sold nearly 43 lakh policies, compared to 30 lakh policies in the previous fiscal year’s same stretch.

Wrapping Up

If you want to be one of the public investors in Star Health Insurance’ latest Initial Public Offering (IPO), you must first open a Demat account in order to conduct online trading. With the aid of Angel One, you can open a Demat account and begin trading in less than five minutes. Angel One will answer any questions you have about your Demat account.

More information on the Star Health Insurance IPO shall be available soon.

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