Star Health IPO Review 2021: This Jhunjhunwala backed company IPO will open from November 30th to December 2nd. Star Health and Allied Insurance Company Ltd. is looking to raise Rs. 7,249.18 Cr. In this article, we take a closer look at the Star Health IPO Review 2021. Keep Reading to find out!
About the company
Founded in 2006, Star Health is the largest private health insurer in India. According to CRISIL Research, the company has a share of 15.8% in the Indian health insurance market for Fiscal 2021. The company has come a long way from being the first standalone health insurance (“SAHI”) company to growing into the largest SAHI company in the overall health insurance market in India.
The company is also the market leader in the Retail Health insurance business accounting for over 31% of the gross premiums collected by the industry in Fiscal 2021. In addition to this, Star Health Insurance has become the market leader in terms of a number of policies issued during the first nine months of Fiscal 2021.
It has issued approximately 4.5 million retail health policies during April-January 2020-21, accounting for a 26% market share. Star Health Insurance has the highest investment amount of more than ₹60 billion, which is more than twice of second largest SAHI company in terms of investment.
In the last 4 years, they have introduced more than 49 different types of policies. They offer a range of flexible and comprehensive coverage options primarily for retail health 87.9%, group health 10.5%, personal accident 1.6% and overseas travel 0.01%, of their total GWP in Fiscal 2021. The company also has developed premium products, such as Star Comprehensive, which have additional coverages and higher sum insured than our traditional products.
The distribution network includes the largest branch network among non-public health insurance providers in India. It has 737 health insurance branches spread across 26 states and 4 union territories in India as of March 31, 2021.
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Financials of the Company
Just like many other companies affected during COVID-19, Star health too faced severe setbacks. The first was difficulty in its operations as the company had to shift its mode of sales. In addition to this, another severe challenge was due to the one-time higher insurance claims during the pandemic. This resulted in the company’s profits falling from Rs. 2680.02 crores from FY 19-20 to a loss of Rs. 8,255.81 for the FY 20-21.
Overview of the Health Industry
- The global health insurance market is estimated to be around USD 1.5 trillion in 2019. The health insurance industry is mainly driven by rising health expenses and an increase in the prevalence of chronic diseases.
- Asia region is expected to see relatively higher growth due to the enhancement of health facilities and raising awareness about health insurance resulting in higher demand for health insurance in high populous countries such as India and China.
- Health insurance premiums have grown at a CAGR of 19% in the last 6 years ending Fiscal 2021. This growth in premium was due to the strong surge in premium income of standalone health insurance companies as the premium grew at a 39% CAGR during the last 6 years (Fiscal 2015-Fiscal 2021), admittedly on a low base, while that of private companies surged at a 21%
- CAGR. On the other hand, the growth of public sector companies has been relatively low as compared to others at 13% for the same period.
Grey Market Premium
Shares of Star Health traded at a 3.33% premium in the grey market as of Friday. The shares are traded at a price of Rs.930. This gives it a premium of Rs 30 over the issue price band of Rs 870-900 per share.
Key IPO Information
The promoters of the company include Safecrop Investments India LLP, Westbridge AIF I and Rakesh Jhunjhunwala. The company has appointed 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. KFintech Pvt Ltd has been appointed as the registrar to the issue.
| Particular | Details |
|---|---|
| IPO Size | ₹7,249.18 Cr |
| Fresh Issue | ₹2,000.00 Cr |
| Offer For Sale(OFS) | ₹5,249.18 Cr |
| Opening Date | Nov 30, 2021 |
| Closing Date | Dec 2, 2021 |
| Face Value | ₹10 per equity share |
| Price Band | ₹870 to ₹900 per equity share |
| Lot Size | 16 Shares |
| Minimum Lot Size | 1 |
| Maximum Lot Size | 13 |
| Listing Date | Dec 10, 2021 |
Objectives of the Issue
The proceeds from the IPO will be used for
- Offer for Sale.
- Augmentation of its capital base and maintenance of solvency levels.
In Closing
In this post, we covered the Star Health IPO Review 2021. The Initial Public Offering opens on November 30th and closes on December 3rd.
For retail investors, it can be a good opportunity to look into the company’s future prospects and apply for the IPO if they believe in the products and growth prospects of the company.
Do let us know what you think of the Star Health IPO review 2021. Are you planning to apply for this IPO or not?
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