Star Health and Allied Insurance IPO: No share sale by Rakesh Jhunjhunwala; stakes likely to remain at 15% post the issue

The appetite for Initial Public Offerings (IPO) refuses to die down as yet another company plans to raise money from the primary markets. India’s first standalone health insurance company Star Health and Allied Insurance will launch its IPO on 30th November. The three-day IPO will end on 2nd December.  

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The Rs 7,249-crore IPO is offering equity shares at a price band of Rs 870-900 per share. In this public issue of Rs 7249 crore, there is an Offer For Sale (OFS) of Rs 5,249 crore and fresh equity shares worth Rs 2000 crore will be available for subscription. 

In the issue, the company has allocated 75 per cent shares for the Qualified Institutional Buyers (QIBs). Around 15 per cent shares have been reserved for the Non-Institutional Investors (NIIs), while the remaining 10 per cent shares have been reserved for the retail investors. 

The listing of the stock is expected on 10 December. 

Competition against 30 companies, 14 per cent market share 

In the health insurance space, there are 31 companies, which are offering general and standalone health insurance services.  

However, Star Health and Allied Insurance is currently offering services in the health insurance segment and it is offering many special products to its customers. 

As per the data available with IRDAI, the health insurance premium for non-life segment stood at Rs 42,500 crore for the October 2021. Out of this the share of Star Health stood at Rs 5976 crore or 14 per cent.   

No share sale by Rakesh Jhunjhunwala 

Ace Investor Rakesh Jhunjhunwala will not be selling his stake in the company. His share will remain at 15 per cent in the company. The existing investors and promoters will be selling their stakes during the IPO. The promoters currently have 62.80 per cent share. 

Company not focusing on Covid-19 policies 

The company has not sold Coronavirus-related plans over many months now and the management has said that it is not focusing on offering plans to customers based on a single illness or short-term requirements. Its focus will continue on providing comprehensive health plans to its customers. 

Covid-19 claim pressure 

The company faces net loss of Rs 380 crore during the July-September quarter as against a net profit of Rs 199 crore during the same quarter in the year ago period.