CHENNAI: Apis Growth Fund I and India Advantage Fund Series 4 have picked up a minority stake in health insurer Star Health and Allied Insurance Co Ltd for as much as Rs 320 crore.
It is learnt that about Rs 220 crore was pumped in by Apis Growth Fund I, a private equity fund of Apis Partners LLP, and about Rs 100 crore from India Advantage Fund Series 4, a PE fund of ICICI Venture.
The deal, syndicated by MAPE Advisory Group, brings Star Health Insurance’s valuation upwards of Rs 2,000 crore, said sources.
Star Health, founded in 2006, is the market leader when it comes to pure-play health insurers in India. The insurer, which is headquartered in Chennai, has a national presence and has brought in innovative products in the health insurance space, say industry observers, who feel “its valuation will be more than justified.”
“Our relationship with Apis Partners — a PE fund focused on financial services in Africa and Asia — and specialist asset management arm of ICICI Bank – ICICI Venture, will enable us to further enhance the platform we have built as one of India’s leading health insurance providers, in a very exciting time for the industry and our business. We look forward to benefiting from their knowledge of the impact of financial technology on similar businesses,” said V Jagannathan, chairman-cum-managing director, Star Health.
Apis Partners will join Star Health’s board of directors, which currently has representation from Sequoia Capital and Tata Capital Growth Fund.
With the general insurance industry seeing a slowdown in growth, standalone health insurers were alone able to report soaring growth rate of 41.2% for 2015-16.
While the health insurance portfolio in general in India saw a 30% growth, Star Health’s grew at 36% reporting premium income of Rs 2,008 crore for the year ended March 31, 2016.
“Star Health is India’s first and leading stand-alone health insurance company in a country where less than 3% of the population have purchased individual and family health insurance,” said Matteo Stefanel, co-founder and managing partner, Apis Partners.
Star Health saw its marketshare in the general insurance industry, which has 29 players, increase to 2.19% from 1.82% in 2015-16, according to data from the General Insurance Corporation of India (GIC). In the standalone health insurance industry, Star Health has the lion’s share with 50% of marketshare, followed by Apollo Munich Health Insurance at 27%, Max BUPA Health Insurance at 13%, Religare Health Insurance at 9% and Cigna TTK at 1%.
“Star Health has consistently demonstrated its strength in the Indian health insurance market and has relentlessly focused on putting the customer at the centre of the organisation, leveraging technological infrastructure, international best practice and true product innovation. We look forward to working with Star Health’s management team in cementing the company’s leading position in the market,” said Apis’ Stefanel.
When it came to marketshare, standalone insurers, including Star Health, saw an increase to 4.54% from 3.65% last year, according to GIC data.
“Star Health has achieved strong growth in recent years, and we believe that the sector is poised for enhanced growth due to powerful demographics and significant increases in discretionary incomes,” said Prashant Purker, managing director & CEO of ICICI Venture.