Apis, ICICI Venture buy 15% stake in Star Health

A fund managed by Apis PE and ICICI Venture have picked up a minority stake in privately held health insurer Star Health and Allied Insurance Co Ltd by investing nearly 320 crore. It is learnt that about 220 crore was pumped in by Apis Growth Fund I, a private equity fund of Apis Partners LLP, and about 100 crore from India Advantage Fund Series 4, a PE fund of ICICI Venture.Apis-ICICI-Venture

The deal, syndicated by MAPE Advisory Group brings Star Health Insurance’s valuation upwards of 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 as the insurer has been extremely prudent in its underwriting practices.”

“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.

The money would be used to maintain the insurers solvency ratios.

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 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%.

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