Rakesh Jhunjhunwala-Backed Star Health Seeks SEBI Nod For IPO

Chennai-based Star Health and Allied Insurance Co. has sought the market regulator’s approval for an initial public offer.

The Rakesh Jhunjhunwala-backed private health insurer aims to raise as much as Rs 2,000 crore via fresh issue, while founders and investors will sell as many as 6.01 crore shares through an offer-for-sale, according to its draft red herring prospectus filed with the Securities and Exchange Board of India.

Founder Safecrop Investments India plans to sell up to 3.07 crore shares in the IPO, the draft prospectus showed. Other selling shareholders include:

• APIS Growth 6 Ltd. offloading up to 76.8 lakh shares.

• MIO IV Star offloading 41.1 lakh shares.

• University of Notre Dame DU LAC offloading 74.4 lakh shares.

• MIO Star offloading 41.1 lakh shares.

• ROC Capital Pty Ltd. offloading 25.1 lakh shares.

Billionaire investor Rakesh Jhunjhunwala owns 14%, or 7.68 crore shares in the company, while his wife Rekha Jhunjhunwala holds 3.26%, or 1.79 crore shares.

Established in 2006, Star Health is India's first standalone health insurer, with a market share of 15.8% as on FY21. Its gross written premium was Rs 9,348.9 crore for the year ended March 2021, according to its draft red herring prospectus.

The firm offers coverage in retail health, group health, personal accident and overseas travel segments—which accounted for 87.9%, 10.5%, 1.6% and 0.01%, respectively, of its total gross written premium in FY21. Retail health, which is the insurer's focus area, accounted for gross written premium of Rs 8,215 crore.

The company earned net premium of Rs 5,022.9 crore with an operating loss of Rs 1,071.2 crore in FY21, the prospectus showed. Outstanding debt liabilities stood at Rs 250 crore while total assets under management amounted to Rs 7,116.6 crore, which earned a realised return of 7.1% and a total portfolio return, including unrealised gains, of 10.2%.

The company settled 15 lakh claims related to Covid-19 amounting to gross paid claims of Rs 1,528.64 crore in FY21. Its distribution network comprises 737 health insurance branches spread across 26 states and 4 union territories.

Kotak Mahindra Capital, Axis Capital, BofA Securities India, Citigroup Global and ICICI Securities are global coordinators and lead managers to the sale. CLSA India, Credit Suisse Securities, Jefferies India, Ambit, DAM Capital, IIFL Securities and SBI Capital Markets are co-book running lead managers.