Rakesh Jhunjhunwala’s latest deal: Key things to know about Rs 6,500 crore Star Health Insurance acquisition

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Published: August 20, 2018 11:15:41 AM

Ace investor Rakesh Jhunjhunwala along with a consortium of private equity firms WestBridge Capital and Madison Capital have agreed to buy Chennai-based Star Health Insurance in Rs 6,500 crore deal. We take a closer look.

Rakesh Jhunjhunwala will be a promoter of Star Health with 35% stake in the company.

Ace investor Rakesh Jhunjhunwala along with a consortium of private equity firms WestBridge Capital and Madison Capital have agreed to buy Chennai-based Star Health Insurance. While the financial details of the deal have not been disclosed, a Bloomberg report estimates the deal value at just under $1 billion, i.e, about Rs 6,500 crore.

The consortium has signed definitive agreements with the shareholders of Star Health & Allied Insurance Company to purchase their shares in Star Health, India’s leading standalone health insurer. Earlier, it was reported that Rakesh Jhunjhunwala was in contention with several other financial investors. According to a CNBC TV18 report, Rakesh Jhunjhunwala will be a promoter of Star Health with 35% stake in the company. Further, Safecrop Holdings will be the new owner of Star Health- Safecrop Holdings comprises of WestBridge AIF, Rakesh Jhunjhunwala, Madison Capital, sources told the channel.

Interestingly, ICICI Lombard General Insurance had placed a bid amount of about Rs 5,800 crore, which fell short of Rakesh Jhunjhunwala-led consortium’s bid of approximately Rs 6,500 crore. So the valuation aspect of this particular transaction went in favour of the consortium led by Rakesh Jhunjhunwala, said CNBC TV18 report.

The existing shareholders of Star Health include Star Health Investments and funds managed or advised by ICICI Venture, Tata Capital and Apis Partners. The transaction is subject to regulatory and certain other approvals, a statement by Star Health said.

Notably, Star Health has a market share of 10.6% in health insurance space in India as of March 31, 2018. The company was founded more than 11 years ago in 2006 and provides health insurance, overseas mediclaim and personal accident policies. The investors are bullish on the prospects of Star Health Insurance in the retail health insurance space.

“We are really excited about Star Health, a dominant market leader in the retail health insurance industry. We believe the retail health insurance industry will continue to grow at a healthy pace in the coming decade, driven by increasing penetration. This aligns well with WestBridge’s investing philosophy and long-time horizon. We are highly confident of Star’s business model and believe that Star will continue to lead the retail health insurance space” Sumir Chadha, co-founder & MD, WestBridge Capital noted. Currently, Star Health Insurance employs 11,000 people providing insurance coverage to more than 1 crore lives. Star Health has a robust distribution platform and an integrated ecosystem to tap the retail health insurance opportunity with 434 branches and offices, 2.4 lakh agents and tie-up with 8,500 network hospitals.

“We have started from a humble beginning and have come to this level with an excellent team work. We feel new investors, with their abundance experience and golden touch, will enable the company to scale further heights,” Jagannathan, chairman-cum-MD of Star health Insurance said.

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