Star Well being Insurance coverage promoters too head for the exit door

Mumbai: Star Well being Investments Pvt. Ltd, the promoter of Star Well being and Allied Insurance coverage Co. Ltd, is seeking to exit India’s first and largest standalone medical insurance agency, searching for to money out within the wake of a slew of preliminary public choices (IPOs) within the insurance coverage sector, three folks conscious of the matter stated.

Star Well being Investments, which owns near 40% of the insurance coverage agency, joins different buyers resembling ICICI Enterprise Fund Administration Co. Ltd and Sequoia Capital in making an attempt to monetize their funding in Star Well being Insurance coverage.

The Financial Instances first reported on 9 February that these shareholders wished to exit.

On 4 August, Mint reported that Star Well being Insurance coverage was seeking to increase as much as Rs3,000 crore in funding by means of major and secondary stake gross sales.

“As you might be conscious…these are pure processes in any rising firm. I can solely say that the corporate and its present administration workforce will proceed to serve the general public,” stated V. Jagannathan, chairman and managing director of Star Well being Insurance coverage. Jagannathan, additionally spokesperson for Star Well being Investments, refused to elaborate additional.

Shareholders of Star Well being Investments embody Sequoia Capital-owned Snowdrop Capital Pte Ltd. (43.71%) and a clutch of Chennai-based people, based on Registrar of Corporations knowledge.

Aside from Star Well being Investments’s near 40% stake in Star Well being and Allied Insurance coverage, ICICI Enterprise and Tata Capital Ltd maintain shut to twenty% every. Apis Companions LLP, Alpha TC Holdings Pte. Ltd and others maintain the remaining.

ICICI Enterprise, Sequoia Capital, Tata Capital and Apis Companions declined to remark. Alpha TC and different shareholders didn’t reply to emails and calls searching for remark.

Two weeks in the past, bankers despatched an alert for a confidentiality settlement to present home common insurers for exploring the choice of a possible merger with Star Well being Insurance coverage lately, the three individuals cited above stated on situation of anonymity.

Kotak Mahindra Capital Co. Ltd has been appointed because the funding banker for shortlisting new promoters and public shareholders for Star Well being Insurance coverage. Kotak Mahindra didn’t reply to an e mail searching for remark.

“…contemplating the competitors and the scope of penetration, capital infusion shall be essential for well being insurers within the coming days for strengthening the community additional and using higher know-how to service clients’ wants,” stated Shashwat Sharma, companion and head of insurance coverage at KPMG India.

“So, together with strategic companions, having severe buyers, too, shall be essential for medical insurance companies,” he added.

The method for the proposed stake sale has simply begun, stated two of the folks cited above. Star Well being buyers are taking a look at a valuation of Rs7,000 crore, about 35 instances the agency’s anticipated revenue for the present fiscal.

As compared, ICICI Lombard Common Insurance coverage Co. Ltd trades at round 40 instances its anticipated revenue within the 12 months forward. Star Well being and Allied Insurance coverage’s gross direct premium underwritten elevated 40% to Rs1,558.36 crore within the April-September interval. The corporate reported a revenue of Rs118 crore for monetary 12 months 2017, which is about 14% decrease than Rs136 crore within the earlier monetary 12 months.

Final week, in an interview with Mint, Housing Improvement Finance Corp. Ltd (HDFC) chairman Deepak Parekh, the Indian promoter of non-life insurance coverage agency HDFC Ergo Common Insurance coverage Co. Ltd, stated the promoters had obtained a proposal from Kotak for Star Well being Insurance coverage. He didn’t elaborate.

The insurance coverage sector has been on a fund elevating spree. In September final 12 months, ICICI Prudential Life Insurance coverage Co. Ltd raised Rs6,057 crore by means of an preliminary public providing and have become the primary Indian insurer to be listed.

Final month, SBI Life Insurance coverage Co. Ltd raised Rs8,400 crore by means of an IPO. ICICI Lombard Common Insurance coverage Co. Ltd, and state-run Common Insurance coverage Co. Ltd and New India Assurance Co. Ltd have additionally raised cash by means of preliminary public choices.

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