A consortium of private equity firms WestBridge Capital and Madison Capital and ace stock market investor Rakesh Jhunjhunwala has agreed to acquire Star Health & Allied Insurance Company Ltd, the insurer said in a statement.
Safecrop Holdings Pvt. Ltd, the buyers' consortium, has signed definitive agreements to acquire the insurer from existing shareholders including Star Health Investments Pvt. Ltd, and private equity firms ICICI Venture, Tata Capital and Apis Partners.
Apis Partners, which had invested in Star Health in 2016, will retain a minority stake in the insurer.
The transaction is subject to regulatory and certain other approvals, India’s largest standalone private health insurer said in the statement. It didn't disclose financial details of the transaction but media reports have pegged the deal value around Rs 6,500 crore.
“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,” said Sumir Chadha, co-founder and managing director at WestBridge.
Chennai-based Star Health is the largest health insurance company in India with a market share of 10.6% in health insurance across all the general insurance companies as on 31 March 2018. Star Health was founded in 2006 and provides health insurance, overseas mediclaim and personal accident policies. The company employs about 11,000 people.
Led by chairman and managing director V Jagannathan, Star Health had recorded a 41% annual rise in direct premium to Rs 4,161 crore and posted a profit after tax of Rs 171 crore for the year ended 31 March 2018.
Kotak Investment Banking, Evercore and Mizuho Securities (Singapore) acted as the financial advisers to Star Health and its shareholders.
Law firms Nishith Desai Associates and Trilegal advised the purchasers while Platinum Partners advised Star Health. Phoenix Legal advised Apis Partners.