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Salient features of the IPO:

* Backed by Rakesh Jhunjhunwala and India’s first pure-play health insurance company, Star Health and Allied Insurance Company Ltd. (Star Health), is coming up with an IPO to raise Rs. 7,250cr, which opens on 30th Nov. and closes on 2nd Dec. 2021. The price band is Rs. 870 - 900 per share.

* The issue is a combination of fresh and OFS. The company will not receive any proceeds from the OFS part of the issue. Net proceeds from the fresh issue will be used to augment the capital base, thereby maintaining the solvency levels of the company.

* In the last 6-12 months, the company has issued shares to the investors at significant discount to the issue price.

Key competitive strengths:

* The largest private health insurance company in India with leadership in the attractive retail health segment

* One of the largest and well spread distribution networks in the health insurance industry and an integrated ecosystem that enables to continue to access the growing retail health insurance market

* A diversified product suite with a focus on innovative and specialized products

* Strong risk management focus with domain expertise driving a superior claims ratio and quality customer service

* Substantial investment in technology & innovative business processes

* Consistently demonstrated superior operating and financial performance

* An experienced senior management team with strong sponsorship

Risk and concerns:

* Unfavorable government policies and regulations

* Continued risk from the Covid-19 pandemic

* Unfavorable movement in the interest rates

* Inability to manage hospital network and distribution channels

* Difficulty in improving and maintaining the profitability

* Competition

Below are the key highlights of the company:

* The Indian health insurance market remains in the early stages of its life cycle and continues to be one of the most underpenetrated markets globally. Lower health insurance density as compared to developed world indicates huge scope of growth in the sector. A number of factors including increasing life expectancy, population growth, relatively higher out-of-pocket expenditure on healthcare, growing awareness of health insurance etc. are expected to continue to drive growth in the health insurance sector in India. Compared to other health insurance segments, retail health insurance segment is one of the most attractive mainly due to lower penetration, density & claims ratio, as well as its higher premium per person in India.

* Covid-19 pandemic is expected to bring higher demand for health insurance in near-to-medium term. On the contrary, health insurers may be impacted by increase in claim pay-outs in the short term. Historically, across the globe outbreak of any disease enhances the awareness of health insurance and opportunity for health insurers. Currently, the awareness of health insurance is at all-time high and thus is expected to benefit the sector.

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