Homegrown private equity fund Kedaara Capital Fund II LLP, through group entity Trishikur Ventures LLP, acquired 72.02% stake in Religare Health Insurance Company Limited (RHICL) in June 2020 for Rs 567.31 crore. The total investment made by Kedaara comprises of primary capital infusion of Rs. 300 crore in RHICL and Rs 267.31 crore for the purchase of RHICL shares from existing shareholders of RHICL, including purchase of 6.39% stake from the company against a consideration of Rs. 200 crore.
Care Health (Previously Religare Health) Insurance Company Limited Unlisted Shares Details:
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Financial performance of Care Health (Rs crore)
Care Health commenced business in 2012 and currently has three major shareholders – Religare Enterprises Limited, Union Bank of India and Corporation Bank. Care Health Insurance is servicing over 700 locations across the country with a network of 110 plus branches and 9,450 plus hospitals. It has a product bouquet of 18 products encompassing group, travel, and fixed benefits to serve varied customers. Care Health Insurance is marketed by a team behind the hospital chain known as Fortis Health Care.
In 2017, Malvinder and Shivinder Singh-promoted Religare Enterprises Limited (REL) has entered into a definitive agreement with a group of investors led by True North to sell its entire 80 percent stake in Religare Health Insurance Company Limited (RHI). The transaction valued RHI at Rs 1300 crore. However, the deal was not completed due to changes in terms by promoters.
Apart from True North, the other investors in the consortium were Gaurav Dalmia and Faering Capital. Faering Capital is founded by HDFC chairman Deepak Parekh’s son Aditya Parekh and his investment banker friend Sameer Shroff. True North was established in 1999 with a focus on investing in mid-sized profitable businesses across diverse sectors. True North was formerly known as India Value. It has launched five separate investment funds with a combined corpus of over $2 billion.
Care Health Insurance has clocked a Gross Written Premium (GWP) of Rs 2325 crore in FY19-20. Total equity share capital as on 31 March 2020 (FY 2020) is Rs 72.79 crore. Based on current market price of Rs 150 approx, market capitalisation comes to around Rs 11000 crore.
Shareholding pattern of Care Healthcare
Religare Enterprises (REL) owns around 70% stake in the firm while Kedara Capital has around 18% stake. Public sector banks including Union Bank and Corporation Bank hold around a 6% stake in the insurance company.
News and IPO Updates
Religare Enterprises is considering an initial public offer (IPO) of up to ₹2,000 crore for its health insurance subsidiary Care Health Insurance, where it plans to issue fresh shares.
Care Health could become the third from the health insurance segment to launch an IPO after Star Health Insurance and Medi Assist India.
Care Health Insurance is the lone candidate from the sector with no peer in either listed or unlisted space. Unlisted shares of this domestic health insurer have been having a dream run in the unlisted market, the unofficial market for trading in such stocks. State-owned The New India Assurance, which also offers health insurance alongside other general insurance products, is the only comparable player allowing equity investors exposure in the listed space.
Care Health Insurance offers products in the retail segment for critical illness, personal accident, top-up coverage, international travel insurance and maternity covers along with group health insurance and group personal accident insurance for corporates. Investors are betting on an expected spike in demand for insurance products, health insurance in particular, in the wake of the pandemic.
Retail health is a high growth business with high entry barriers. This is proved by the fact that retail health premiums have grown by 20% CAGR over the last 5 years and no player has been able to grow its market share meaningfully apart from Star Health and Care Health over the last 5 years.
Additionally, the high share of PSU insurers with low solvency continues to provide a growth opportunity for strong players like Care Health.