Arth Capital ties up with industry veteran to float health insurance firm

Home-grown mid-market private equity firm Arth Capital is partnering Rajesh Relan, the former managing director of PNB MetLife Insurance, to float a health insurance company, a media report said.

Relan has filed an application seeking approval for the health insurance company with Insurance Regulatory and Development Authority (IRDA), The Economic Times reported. Relan confirmed the development but did not elaborate on the details.

The new entity, Aspire Health Insurance, will have an initial corpus of Rs 100 crore and the promoters will subsequently pump in another Rs 250 crore. Hong Kong-based Mcquarie investment fund will have a 34% stake in the new company.

Relan, who was with PNB MetLife for over eight years before being appointed as the US-based MetLife’s head of bancassurance for the Asia region, will hold 26% in Aspire Health Insurance. 

Arth Capital will hold 40% in the new company. The private equity firm, which was launched by Sumit Chandwani and Anish Modi in 2012, shelved its fund-raising plans after it became difficult to raise money from limited partners.

Subsequently, VCCircle had reported, that Chandwani, along with another senior executive Rohit Razdan, had moved on to join another PE firm as consultants. However, the Arth Capital site still lists Chandwani as partner, along with Razdan. The other members are Bhusan Joshi, operating partner, and Sumit Bhartia, an associate.

Modi had been advising and investing in Indian companies in special situations through Tarang Advisory Pvt Ltd, and does not figure on the website.

Emails sent to Arth Capital, Rajesh Relan and Mcquarie did not elicit any response till the time of filing this article.

Private equity and venture capital investments in the health insurance sector has, of late, been muted.

Star Health and Allied Insurance Co. Ltd. had received its first funding from Sequoia Capital in 2007. Last year, ICICI Venture and Apis Partners pumped in Rs 315 crore in Star Health and Allied Insurance. 

However, the Indian insurance industry, across segments, had been growing rapidly for the past few years, and has witnessed the participation of more private firms. Premium collection in the health segment grew 21.30% year-on-year, from Rs 22,636 crore to Rs 27,457 crore in 2015-16, according to the IRDA. Besides, the market share of the health segment has also increased to 28.49% in 2015-16 from 26.73% in the previous fiscal year. 

Major stand-alone health insurers in the country are Apollo Munich, Cigna TtK and Max Bupa – all joint ventures between domestic and foreign companies.

Like this report? Sign up for our daily newsletter to get our top reports.

Leave Your Comment(s)