WestBridge consortium to acquire Star Health

Chennai: A consortium comprising WestBridge Capital, billionaire investor Rakesh Jhunjunwala and Madison Capital has agreed to acquire India’s largest health insurer Star Health and Allied Insurance. The deal size of the acquisition was not disclosed formally, though it is estimated at around $1 billion.
TOI first reported on June 4 this year that WestBridge and Jhunjhunwala combine was leading the race to buy Star Health. This is the biggest M&A bet by ace stock market investor Jhunjhunwala till date.He diluted a little over 1% stake in Titan, raising about Rs 850 crore, which was deployed for acquiring Star Health. WestBridge is one of the largest India-focused private equity investors managing assets worth over $2.5 billion.
All the existing shareholders, including ETA group and private equity investors ICICI Venture, Tata Capital, Sequoia and Aois Partners, among others, have offloaded their stakes. The country’s first standalone health insurance venture is the brainchild of V Jagannathan, former head of state-owned United India Insurance. The incumbent management team led by Jagannathan will continue to run the business under the guidance of new investors.
WestBridge and Jhunjhunwala-led consortium pipped bidders ICICI Lombard and Prudential and PremjiInvest combine to clinch the deal. “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,” said Sumir Chadha, co-founder and managing director, WestBridge Capital.
Star Health is the market leader with a share of 10.6% of the Rs 34,000-crore health insurance market, which is growing at more than 25% year-on-year. Jhunjhunwala said, “The management of Star Health has built its leadership position in private health insurance through innovation, perseverance and excellence.” Star Health CMD Jagannathan said, “We have started from a humble beginning and have come to this level with excellent team work. We feel new investors, with their abundance experience, will enable the company to scale further heights.” Based in Chennai, Star Health — founded in 2006 — employs more than 11,000 people providing insurance coverage to one crore lives as on March 31, 2018.
Kotak Investment Banking, Evercore and Mizuho Securities acted as the financial advisers to Star Health and its shareholders while Nishith Desai Associates and Trilegal acted for the buyers and Platinum Partners acted for the company.