India: Star Health files DRHP to raise funds via IPO route

Health insurer Star Health and Allied Insurance Co. Ltd, owned by a consortium of investors, including Rakesh Jhunjhunwala and Westbridge Capital, has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India to raise funds via an initial public offering (IPO).

The IPO consisted of a fresh issue of 2,000 crore and an offer for sale (OFS) of 60.10 million shares by existing promoters and shareholders.

An OFS comprises a sale of up to 30.68 million shares by Safecrop Investments India LLP, up to 138,000 shares by Konark Trust, up to 9,518 equity shares by MMPL Trust, up to 7.68 million shares by Apis Growth 6 Ltd, up to 4.11 million shares by Mio IV Star, up to 7.44 million shares by University of Notre Dame DU LAC, up to 4.11 million shares by Mio Star, up to 2.51 million shares by ROC Capital PTY Ltd, up to 1.47 million shares by Venkatasamy Jagannathan, up to 1.8 million shares by Sai Satish, and up to 144,000 equity shares by Berjis Minoo Desai.

The proceeds from the issue will be deployed in FY22 towards augmentation of its capital base. According to IRDAI 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 FY21. As of FY21 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 FY21. 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 7,405.32 crore against 5,453.78 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 2021, which it expect may have an impact on its net Incurred claims ratio and our solvency ratio for FY22.

The firm settled and paid 0.15 million claims related to covid-19 amounting to gross paid claims of 1,528.64 crore as of March 2021. Outstanding covid-19 claims amounted to 110.35 crore. Overall gross incurred claims amounted to 1,638.98 crore on account of covid-19 and net incurred claims after reinsurance amounted to 1206.06 crore.

This article was first published on livemint.com.

Singapore Reporter/s

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Following vacancies can be applied for (only in Singapore).   

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.