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WestBridge, Madison And Rakesh Jhunjhunwala To Acquire Star Health Insurance

A consortium of private equity firms WestBridge Capital and Madison Capital, and billionaire investor Rakesh Jhunjhunwala agreed to buy Star Health and Allied Insurance Company Ltd.

The buying consortium—Safecrop Holdings Pvt. Ltd.—will acquire shares from Star Health Investments Pvt. Ltd. and funds managed or advised by ICICI Venture, Tata Capital and Apis Partners, according to a statement by the insurer.

The company didn’t disclose financial details. People aware of the details, however, told BloombergQuint requesting anonymity that the deal valued the insurer at Rs 6,300-6,500 crore.

Kotak Investment Banking and Evercore and Mizuho Securities (Singapore) were the advisers to the deal, which is subject to regulatory approvals.

“We believe the retail health insurance industry will continue to grow at a healthy pace in the coming decade, driven by increasing penetration,” Sumir Chadha, co-founder and managing director at WestBridge Capital, said in the statement. “This aligns well with WestBridge’s investing philosophy and long-time horizon.”

The insurer, which has been on the block since October, had a market share of 10.6 percent in health insurance as of March 31, making it the largest standalone health insurer in India, according to its statement.

“We feel new investors, with their abundance experience and golden touch, will enable the company to scale further heights,” V Jagannathan, chairman and managing director of the insurance company, said in the press release.

Promoter Star Health Investments Pvt Ltd.— jointly funded by Middle-East based-ETA Group along with two other investors—will sell 43.67 percent in the insurer. Other top shareholders looking to exit the company are ICICI Ventures, Sequoia Capital, Alpha TC Holdings, Oman Insurance, Tata Capital, and global private equity investor Apis Partners, along with Jagannathan, who led the stake sale.

The insurer, with a 92 percent exposure to retail health business, earned direct premium of Rs 4,161 crore for the year ended March 2018. Its profit rose 45 percent on a yearly basis to Rs 171 crore. The company had a net worth of Rs 960 crore during the period.