Star Health and Allied Insurance Company on Monday said it has raised a little over Rs 3,217 crore from anchor investors ahead of its IPO on Tuesday.
The company has decided to allocate a total of 3,57,45,901 equity shares to 62 anchor investors at Rs 900 apiece, aggregating to Rs 3,217.13 crore, according to a circular uploaded on the BSE website.
Monetary Authority of Singapore, Government of Singapore, Abu Dhabi Investment Authority, Morgan Stanley Asia (Singapore) Pte, Goldman Sachs (Singapore) Pte, BNP Paribas Arbitrage and Societe Generale are among the anchor investors.
In addition, SBI Life Insurance Company, HDFC Life Insurance Company and Edelweiss Mutual Fund have been allocated shares.
The initial public offering (IPO) comprises a fresh issue of equity shares worth Rs 2,000 crore and an offer for sale of up to 58,324,225 equity shares by promoters and existing shareholders.
Those offering shares through the offer for sale are promoter and promoter group -- Safecrop Investments India LLP, Konark Trust, MMPL Trust--- and existing investors Apis Growth 6 Ltd, Mio IV Star, University of Notre Dame Du Lac, Mio Star, ROC Capital Pty Ltd, Venkatasamy Jagannathan, Sai Satish and Berjis Minoo Desai.
The public offer includes a reservation of shares worth Rs 100 crore for employees.
The issue, with a price band of Rs 870-900 a share will open for public subscription between November 30 and December 2.
At the upper end of the price band, the initial share-sale is expected to fetch Rs 7,249.18 crore.
Proceeds from the fresh issue would be used to augment the company's capital base.
About 75 per cent of the issue size has been reserved for qualified institutional buyers (QIBs), 15 per cent for non-institutional investors and the remaining 10 per cent for retail investors.
Investors can bid for a minimum of 16 equity shares and in multiples thereof.
According to various media reports, here’s what the brokerages have to say about the Star Health public issue:
The valuation commanded by the company at around 5.5x FY21 market cap/ GWP are in line with recent deals in the SAHI (Standalone Health Insurers) space and appears fair considering its positioning. Hence, the brokerage recommends to ‘Subscribe’ to the IPO from a long-term perspective only.
We view STAR’s valuations at 8.2x Sep 2021 BV favorably in comparison to similar levels for ICICI Lombard, as we expect STAR to continue to grow at much higher growth rates while maintaining decent ROE in the post covid era. We recommend subscribing to the issue from a long-term perspective.
The brokerage house feels that Star Health is the largest private health insurance company in India with leadership in the attractive retail health segment. It has a pan India presence through a well-spread distribution network and integrated ecosystem and has consistently demonstrated superior operating and financial performance
The companycontinues to leverage and enhance its market leadership position and boost its existing distribution channels and develop alternative channels. Moreover, it has collaborations with fintech and insurtech companies, with a focus on SME group sales. The brokerage house has given a subscription call.
The brokerage firm states in its IPO note, that the Indian health insurance market continues to remain underpenetrated with a health insurance penetration of only 0.36 per cent of GDP in 2019, compared to the global average of approx. 2.0 per cent of GDP.
It expects, the gross direct premium for health insurers to grow at approx. 18 per cent CAGR over the next four years. Within this, the retail business is expected to grow at a CAGR of 23 per cent between FY21-25 as compared to 15 per cent and 11 per cent CAGR growth in group and government business.
Star Health stands to benefit given its leadership position and going forward the company intends to enhance its market leadership position by leveraging its strong brand. Further, investments in digitization would help the company achieve higher operational efficiencies and better customer service, adds the IPO note.