Star Health IPO opens tomorrow: Here’s everything you need to know

The initial public offering (IPO) of Star Health and Allied Insurance Company will open for subscription on Tuesday, November 30, 2021, at a price band of Rs 870-900 per share. The offer will be available till Thursday, December 2, 2021.

Star Health is a leading private health insurer in the country, is owned by a consortium of investors like Westbridge Capital and Rakesh Jhunjhunwala.

Through the offer, Star Health aims to raise Rs 7,249.18 crore. The IPO comprises a fresh issue of equity shares worth Rs 2,000 crore and an offer-for-sale (OFS) of up to 58,324,225 equity shares by promoters and existing shareholders.

Through the OFS, those offering shares 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 Star Health IPO has got 75 per cent reserved for qualified institutional buyers (QIBs) and 15 per cent reserved for non-institutional investors (NIIs). The remaining 10 per cent of the issue is available for retail investors.

The proceeds from the fresh issue will be used to augment the company’s capital base and maintenance of solvency levels, according to the information in the red herring prospectus (RHP).

Investors who wish to subscribe to Star Health IPO can bid in a lot of 16 equity shares and multiples thereafter. At the upper price band, they will be shelling out Rs 14,400 to get a single lot of Star Health and Allied Insurance Company. The shares will be listed on both BSE as well as the National Stock Exchange (NSE).

The applicants also must note that the cut-off time for UPI mandate confirmation is Friday, December 3, 2021, upto 12:00 pm. If they fail to do so then their application may not be considered.

Kotak Mahindra Capital Company, Axis Capital, BofA Securities India, Citigroup Global Markets India, ICICI Securities, CLSA India, Credit Suisse Securities (India), Jefferies India, Ambit, DAM Capital Advisors, IIFL Securities and SBI Capital Markets are the book running lead managers to the offer while KFin Technologies is the registrar of the issue.

On listing, Star Health will join other listed insurance peers such as SBI Life Insurance Company, HDFC Life Insurance Company, ICICI Prudential Life Insurance Company and ICICI Lombard General Insurance Company.

Before heading into the IPO, the bidding for anchor investors will be open today, November 29.

Commenting on the upcoming IPO, Ravi Singh, VP and Head of Research at Share India Securities said, “Due to the Covid pandemic, the awareness in health insurance sector has increased and the retail health market segment is expected to emerge as a key growth driver for the overall health insurance industry in India.”

He added that the Health Insurance sector has a strong positive outlook and since there are only two listed general insurance companies – ICICI Lombard and New India Insurance, he expects Star Health a good option to invest for long term.

The share allotment is likely to take place on December 7, 2021, and the shares are expected to be listed on December 10, 2021, according to the timeline given in the RHP.