Star Health IPO to open on 30 Nov; closes on 2 Dec

Market


The initial public offering of Star Health and Allied Insurance Co Ltd, owned by a consortium of investors including Rakesh Jhunjhunwala and Westbridge Capital, will open for subscription on 30 November and close on 2 December.

The firm plans to list on exchanges on 10 December.

The health insurer IPO consists of a fresh issue of 2000 crore and an offer for sale of upto 58.32 million shares by its existing promoters and shareholders.
The OFS includes upto 30.68 million shares by Safecrop Investments India LLP, upto 7.68 million shares by Apis Growth 6 Ltd, upto 7.44 million shares by University of Notre Dame DU LAC, upto 4.11 mln shares by MIO IV Star, upto 4.11 mln shares by MIO Star, upto 2.51 mln shares by ROC Capital Pty Ltd.

Currently, Safecrop Investments India LLP has 47.77% stake while Rakesh Jhunjhunwala and his wife Rekha Jhunjhunwala hold 14.98% and 3.23% stake respectively in the firm.

The proceeds from the issue will be deployed in fiscal year 2022 towards augmentation of its capital base. According to IRDA norms and regulations, the firm is required to maintain a minimum solvency ratio of 1.50. As of March 2021 its solvency ratio was 2.23x.

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.

Kotak Investment Banking, Axis Capital, Bofa Securities India, Citigroup Global markets India, ICICI Securities, CLSA India Pvt ltd, Credit Suisse Securities India, Jefferies India Pvt Ltd, Ambit Pvt Ltd, DAM Capital Advisors, IIFL Securities and SBI Capital Markets are the book lead running managers to the issue.

The company is the largest private health insurer in India with a market share of 15.8% in the Indian health insurance market in Fiscal 2021. As of fiscal year 2021 it had a total Gross Written Premium (GWP) of 93.49 billion.

It offers a range of flexible and comprehensive coverage options primarily for retail health, group health, personal accident and overseas travel, which accounted for 87.9%, 10.5%, 1.6% and 0.01%, respectively, of its total GWP in Fiscal 2021. For FY21, it issued 7 million health insurance policies. Since inception till date, it has processed approximately 6 million claims.

It has successfully built one of the largest health insurance hospital networks in India, with more than 10,870 hospitals. Out of the total number of hospitals in its network, it has entered into pre-agreed arrangements with over 7,000 hospitals, or 64.9%, of the total number of hospitals in its network as of FY21, and it processed 0.33 million claims, or 55.0% of its total number of cashless claims, through our agreed network hospitals. It has over 12,800 employees and over 640 branch offices across India.

For FY21 its total income stood at 7405.32 crore against 5453.78 crore a year ago. Net loss for the period stood at 825.58 crore versus 268 crore a year ago.

The company said it has seen a significant increase in claims across its network, in particular most recently during the resurgence in COVID-19 cases in April and May of 2021, which it expects may have an impact on its net Incurred Claims Ratio and our solvency ratio for Fiscal 2022.

The firm settled and paid 0.15 million claims related to COVID-19 amounting to gross paid claims of Rs1528.64 crore as of March 2021. Outstanding COVID 19 claims amounted to Rs110.35 crore. Overall gross incurred claims amounted to Rs1638.98 crore on account of COVID-19 and net incurred claims after reinsurance amounted to Rs1206.06 crore.

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