Jhunjhunwala backed Star Health set to file for IPO

Health insurer Star Health and Allied Insurance Co Ltd, owned by a consortium of investors including Rakesh Jhunjhunwala and Westbridge Capital, is planning a public share sale to raise at least ₹2,000 crore, three people aware of the development said.

Founded in 2006 as India’s first standalone health insurance provider, Star Health provides health, personal accident and overseas travel insurance. “They are planning to file the draft red herring prospectus by the end of the month, but it is likely that this may slip into the first or second week of June," said one of the three people cited above, all of whom spoke on condition of anonymity.

The initial public offering (IPO) is likely to be a mix of primary and secondary share sales by the company and the investors, he added. “Around 10-12 investment banks are working on this IPO including Kotak Mahindra Capital, Citibank, Credit Suisse and Bank of America," the second person said. Emails sent to Rakesh Jhunjunwala, Westbridge Capital and Star Health remained unanswered.

The investor consortium, which also includes Madison Capital, had in August 2018 agreed to acquire over 90% stake in Star Health from existing investors Star Health Investments Pvt. Ltd and private equity funds managed by ICICI Venture, Tata Capital and Apis Partners. The consortium had acquired the insurer at a valuation of close to ₹6,000 crore.

The proposed IPO will make Star Health the fourth private sector insurance provider to list on Indian stock exchanges, following HDFC Life Insurance Co. Ltd, ICICI Prudential Life Insurance and ICICI Lombard General Insurance. Other listed insurance companies include SBI Life Insurance and state-owned The General Insurance Co. of India and New India Assurance Co. Ltd.

According to the company’s website, Star Health has underwritten a gross written premium of ₹6,865 crore during 2019-20 and had a net worth of ₹1,889 crore as on 31 March 2020. It has over 12,800 employees and over 640 branch offices across India. At FY21-end, the insurer’s solvency ratio, the measure of a company’s ability to meet its dues, increased to 2.22 from 1.88 in the year-ago period.

Source: Live Mint