Star Health & Allied Insurance Co. Ltd has raised Rs 3,217.13 crore ($428 million) from a bunch of anchor investors including the sovereign wealth funds of Singapore and Abu Dhabi.
India’s largest health insurance firm by market share, which is backed by Apis Partners, Madison Capital and stock market investor Rakesh Jhunjhunwala, allotted 35.745 million shares at the upper end of the Rs 870-900 price band.
GIC and American asset management firm Baillie Gifford each bought shares worth nearly Rs 250 crore while the Capital Group invested Rs 225 crore.
Hong Kong-based asset management firm Ward Ferry invested Rs 245 crore. Abu Dhabi Investment Authority bought shares worth Rs 135 crore.
Anchor investors are institutional investors who accept a one-month lock-in period for a sizable allocation of shares and support a public offering. Their participation highlights investors’ confidence in an IPO and sets a benchmark for the investor community at large.
Among domestic funds, Ashoka India Opportunities Fund—co-managed by former Goldman Sachs India head Prashant Khemka—as well as Kuber India Fund, IIFL Special Opportunities Fund and mutual funds participated in the anchor allotment.
Max Life Insurance, Bharti Axa Life Insurance, HDFC Life Insurance Co, and SBI Life Insurance are among domestic insurers that invested in the anchor allotment.
Star Health is seeking a valuation of Rs 51,796 crore ($7 billion at current exchange rates) through the IPO.
The Rs 7,250 crore offering opened Tuesday and closes Thursday. The IPO of 44.9 million shares, excluding the anchor allotment, was covered 11% on the first day after receiving bids for nearly 5.32 million shares.
The portion of shares reserved for retail individual investors received 64% demand. Non-institutional investors, comprising wealthy individuals and corporate bodies, bid for 1.1% shares reserved for them. Institutional investors bid for a handful of shares.
The IPO comprises a fresh issue of shares worth Rs 2,000 crore and a secondary market sale of 58.32 million shares by promoters and its private equity backers Madison India Capital and Apis Partners.
Madison, which is invested through two of its investment vehicles, will sell nearly a fifth of its stake worth Rs 739.91 crore, while London-based Apis is selling a fourth of its stake for Rs 691.23 crore.
Jhunjhunwala, who is the second-largest shareholder and co-promoter of the Chennai-based company, is not selling any shares in the IPO.
The insurance company was incorporated in 2005 and was granted the insurance regulator’s nod to commence business a year later. It is the largest private health insurer in India with a market share of 15.8%, according to CRISIL Research.
There are no directly comparable peers but among the private general insurers that offer health insurance as part of their product suite, ICICI Lombard would be a comparable firm. ICICI Lombard has a net worth of more than double that of Star Health and has a market capitalization of Rs 70,607 crore.
Star Health has picked as many as 11 merchant banks for the IPO. Kotak, Axis, Bank of America, Citi and ICICI Securities are the global coordinators and book running lead managers. Among others, CLSA, Credit Suisse, Jefferies are the book running lead managers. Ambit, DAM Capital and IIFL are co-book running lead managers.