Star Health Insurance Files DRHP - Insurance IPO

Standalone insurance businesses in the private sector are rare. Normally, insurance companies in India have been backed by the government or by large banks like SBI, ICICI, HDFC and Kotak Bank. It is in this tough environment that the health insurance vertical of Star Health has garnered a 52% market share. 

A full 15 years after Star Health was floated by V Jagannathan of United India Assurance in 2006, it has decided to hit the IPO market with a proposed IPO to augment its capital base in sync with business growth.

Star Health has filed DRHP with SEBI for a combination of fresh issue and an offer for sale to early investors. The IPO will consist of Rs.2,000 crore to be raised via fresh issue of shares and 6 crore shares offered by way of OFS, at a price to be determined later. 

Currently, Star Health is owned to the extent of 90% by a consortium of Westbridge Capital, Madison Capital and Rakesh Jhunjhunwala. Earlier this year, another Jhunjhunwala backed company (Nazara Technologies) had also hit the IPO market with a pure OFS.

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While health insurance remains the bread and butter of Star Health, it also offers personal accident policies and overseas insurance. Health insurance in India gained immensely from the health awareness triggered by COVID-19 and Star Health, with a 52% market share and 30% share of individual policies, was a big beneficiary. 

In the health insurance space, Star Health competes with Max Bupa, ICICI Lombard, HDFC Ergo, NIA and Bajaj Allianz. In FY20, Star Health had underwritten gross premiums of Rs.6,870 crore and this is expected to have grown further in FY21. Star operates through 640 branches and settles claims through its all-India network of over 9,500 hospitals.