Safecrop Holdings to acquire stake in Star Health Insurance for $1 bn

Founded in 1996, Star Health was the country's first standalone insurance company and claims to be the largest such domestic firm

Safecrop Holdings Pvt Ltd, a consortium of investors, including WestBridge AIF, Rakesh Jhunjhunwala and Madison Capital, has signed a definitive agreement with the shareholders of Chennai-based Star Health & Allied Insurance Company Ltd to acquire their shares. While the company and investors did not disclose the value of the deal, market sources said that it was around $1 billion.     

V Jagannathan, chairman & managing director of Star Health & Allied Insurance Company, declined to comment on the valuation or any numbers but said that the new investors, with their experience and golden touch, would enable the company to scale further heights.  

Existing shareholders of Star Health include Star Health Investments Pvt Ltd, ICICI Venture, Apis Partners, Tata Capital, Alpha, Oman Insurance, and Jagannathan, which cumulatively hold 89.42 per cent stake in the company as on March 31, 2018.  

Star Health, founded in 1996, was the country's first standalone insurance company and claims to be the largest such domestic firm with a market share of 10.6 per cent in health insurance as on March 31, 2018.     

Kotak Investment Banking, Evercore and Mizuho Securities (Singapore) acted as the financial advisors to Star Health and its shareholders. Nishith Desai Associates and Trilegal acted as advisors for the purchasers and Platinum Partners for the company.  

The company's net profit for the financial year 2017-18 was Rs 1.7 billion, as against Rs 1.18 billion a year ago. The gross direct premium was Rs 41.61 billion, as against Rs 29.6 billion. 

"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," said Sumir Chadha, co-founder & managing director, WestBridge Capital. 

After the regulator allowed general insurers to apply for standalone health insurance companies, it received several applications, including from Reliance Capital, ICICI Lombard, Premji Investment and others.