Investors Apis Growth and Madison Capital have recently divested their stakes in Star Health & Allied Insurance, a company backed by the late Rakesh Jhunjhunwala, in a block deal executed on Thursday, as per sources familiar with the matter. The transaction is estimated to have a value ranging between USD 250 million and USD 270 million, involving around 41.3 million shares traded on the National Stock Exchange, as reported by Bloomberg.
The sale, managed by ICICI Securities, saw a notable surge in the company's stock price, rising by as much as 6.3 per cent during Thursday's trading session to reach its highest levels since February 2023. This move follows Apis Growth's earlier sale of 10 million shares of Star Health for Rs 553 crore in March 2024. As of 31 March, Apis Growth held a 2.61 per cent stake, while entities associated with Madison Capital held stakes of 2.21 per cent and 2.39 per cent respectively.
The favorable investor sentiment surrounding Star Health can be attributed in part to the company's robust financial performance. For the fourth quarter ending March, the company reported a 40 per cent increase in net profit, reaching Rs 142 crore compared to Rs 102 crore in the corresponding period last year. Additionally, the company witnessed significant growth in gross written premium, amounting to Rs 4,968 crore compared to Rs 4,199 crore in the previous year. Its net premium also saw an uptick, reaching Rs 4,570 crore compared to Rs 3,993 crore.
Star Health maintained a 33 per cent market share in the retail health insurance sector in FY24, and its market share among general insurance companies grew by 22 basis points to 5.26 per cent during the year. The company also improved its cashless claims payout ratio to 87 per cent of total claims in FY24, up from 80 per cent in FY23. Furthermore, it added over 75,000 agents in FY24, bringing the total number of agents servicing customers to over 7 lakh.
However, despite these positive developments, Star Health's shares have experienced a downward trend since their debut in December 2021, failing to regain their IPO price of ₹900. They closed at Rs 539.30 on May 22, marking a decline of over 40 per cent from the initial offering price.
