ICICI Lombard frontrunner for Star Health

Mumbai: In a race to acquire Star Health, ICICI Lombard General Insurance Co has emerged as the leader edging past the competing consortium of West Bridge Capital and Rakesh Jhunjhunwala, valuing the company at Rs 6,000 crores, according to a recent report in ET.

V Jagannathan, former CMD of United India is the man behind the firm who has driven the company to become one of the profitable insurers in the health space, who holds a 3.5% stake in the company.

The firm is owned by global and local VCs and private equity funds led by Sequoia Capital-owned Snowdrop Capital Pte Ltd, Oman-based insurer Oman Insurance Company and Dubai-based conglomerate ETA Trading and other investors in its operating company include ICICI Venture, Tata Capital Ltd, Apis Partners LLP and Alpha TC Holdings Pte Ltd among others.

Currently, Star Health’s promoter group holds close to 44 percent, of which 37.5 percent is with domestic investors and 6.16 percent is with foreign investors. Total foreign investment in the company stood at 36.5 percent as against the maximum permissible 49 percent.

According to the daily, the value of the company has raised after the last round of investment. Apis Partners and ICICI Venture purchased a 15 percent stake for Rs 320 crores at a valuation of more than Rs 2,100 crores.

Warburg Pincus is a key investor in ICICI Lombard and if the deal become successful, ICICI Lombard will become the leading player in the health insurance segment in the country.

An official told ET, “There were various combinations that were being considered — a transaction at the holding company or at the operating company, keeping in mind the tax implications. The incumbent management is backing a financial bidder but ICICI Lombard has the edge.”

Speraking with ET, another source said, “However, the second-highest bidder might also be asked to revise the terms as a fallback option.”

West Bridge joined with Jhunjhunwala after its earlier partner Kedaara Capital opted out due to valuation differences. The third bidder that was selected for the final rounds of negotiations was UK insurer Prudential Plc along with Premji Invest.

As per the news report, the transaction will mark the finale of an 18-month bidding process, which saw interest from over a dozen bulge-bracket private equity funds like Bain Capital, Warburg and insurance peers like HDFC Ergo and Hero Fin-Corp and Bajaj Allianz.