Rakesh Jhunjhunwala-backed Star Health IPO in progress: Should you subscribe to the issue?
The firm plans to raise Rs 7,249.18 crore through the IPO at the upper end of the price band. The issue will close on December 2.
- Nov 30, 2021,
- Updated Nov 30, 2021 12:07 PM IST
The initial public offer (IPO) of Star Health and Allied Insurance Company opened today. The firm plans to raise Rs 7,249.18 crore through the IPO at the upper end of the price band. The issue will close on December 2. The share sale has a price band of Rs 870-900 per share.
On November 29, the Rakesh Jhunjhunwala-backed insurance firm raised a little over Rs 3,217 crore from anchor investors ahead of the IPO.
The company 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.
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 were allocated shares.
Jhunjhunwala and his wife Rekha are the second-largest shareholders in the company with 18.21 percent stake. Safecrop Investments India LLP is the biggest shareholder with 47.77 percent stake in the company.
The IPO comprises 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.
Shares worth Rs 100 crore have been reserved for employees.
The net proceeds from the issue will be utilised towards raising of company's capital base and maintenance of solvency levels.
The IPO's lot size is 16 shares for which one will have to spend Rs 14,400. A retail-individual investor can apply for up to 13 lots or 208 shares by spending Rs 187,200.
The allotment of shares will be finalised on December 7, 2021 and the firm will make its debut on BSE and NSE on December 10.
Star Health and Allied Insurance Company is among the largest private health insurers in India with market share of 15.8% in fiscal 2021.
The company focuses on the retail health and group health segments which accounted for 89.3% and 10.7% of the company's total gross Gross Written Premium GWP in fiscal 2021 respectively.
Choice Broking has given a 'Subscribe with caution' rating to the issue.
"The peers considered for benchmarking the valuation operate in the general insurance market and health insurance is one of their various offerings. Thus, these can be considered as a proxy peer. At a higher price band of Rs 900, Star Health is demanding a market cap-to-net premium earned multiple of 10.3 times, which is at premium to the peer average. Moreover, the demanded valuations are at an elevated premium to recent capital issuance," the brokerage said.
Marwadi Financial has assigned an 'avoid' rating to the issue citing its high valuation.
"Considering the September 30, 2021 adjusted book value per share of Rs 90.35 on post issue basis, the company is going to list at a P/B of 9.96 with a market cap of Rs 5,17,961 million, while its peers namely ICICI Lombard and New India Assurance Limited are trading at P/B of 8.25 and 0.71 respectively. We assign "Avoid" rating to this IPO as issue is expensive as compared to its peers," the brokerage said.
The initial public offer (IPO) of Star Health and Allied Insurance Company opened today. The firm plans to raise Rs 7,249.18 crore through the IPO at the upper end of the price band. The issue will close on December 2. The share sale has a price band of Rs 870-900 per share.
On November 29, the Rakesh Jhunjhunwala-backed insurance firm raised a little over Rs 3,217 crore from anchor investors ahead of the IPO.
The company 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.
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 were allocated shares.
Jhunjhunwala and his wife Rekha are the second-largest shareholders in the company with 18.21 percent stake. Safecrop Investments India LLP is the biggest shareholder with 47.77 percent stake in the company.
The IPO comprises 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.
Shares worth Rs 100 crore have been reserved for employees.
The net proceeds from the issue will be utilised towards raising of company's capital base and maintenance of solvency levels.
The IPO's lot size is 16 shares for which one will have to spend Rs 14,400. A retail-individual investor can apply for up to 13 lots or 208 shares by spending Rs 187,200.
The allotment of shares will be finalised on December 7, 2021 and the firm will make its debut on BSE and NSE on December 10.
Star Health and Allied Insurance Company is among the largest private health insurers in India with market share of 15.8% in fiscal 2021.
The company focuses on the retail health and group health segments which accounted for 89.3% and 10.7% of the company's total gross Gross Written Premium GWP in fiscal 2021 respectively.
Choice Broking has given a 'Subscribe with caution' rating to the issue.
"The peers considered for benchmarking the valuation operate in the general insurance market and health insurance is one of their various offerings. Thus, these can be considered as a proxy peer. At a higher price band of Rs 900, Star Health is demanding a market cap-to-net premium earned multiple of 10.3 times, which is at premium to the peer average. Moreover, the demanded valuations are at an elevated premium to recent capital issuance," the brokerage said.
Marwadi Financial has assigned an 'avoid' rating to the issue citing its high valuation.
"Considering the September 30, 2021 adjusted book value per share of Rs 90.35 on post issue basis, the company is going to list at a P/B of 9.96 with a market cap of Rs 5,17,961 million, while its peers namely ICICI Lombard and New India Assurance Limited are trading at P/B of 8.25 and 0.71 respectively. We assign "Avoid" rating to this IPO as issue is expensive as compared to its peers," the brokerage said.