India Advantage Fund Series 3, the latest fund by ICICI Venture, India's largest private equity player, has announced its maiden investment. The fund is investing Rs120 crore ($27 million) in Star Health and Allied Insurance Company Limited.
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The Chennai headquartered Star Health has garnered gross premiums of about $ 200 million in the just ended fiscal. The insurance company was promoted by shareholders of the ETA Ascon group (a large middle east based business conglomerate with interests in engineering, shipping, real estate and financial services) and Oman Insurance Company (subsidiary of the UAE based Mashreq Bank with total assets of $25 billion).
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Star Health is led by V Jagannathan, former Chairman and MD of United India Insurance. It has since its inception in 2006 has grown to about 3000 employees now with significant footprint in various parts of the country.
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"We believe that the Indian health insurance market is poised for an exciting future given the low penetration levels witnessed historically despite a clear underlying consumer need", Vishakha Mulye, MD and CEO of ICICI Venture said in a press statement.
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The Indian health insurance industry has grown at an annual rate of over 35% since the opening up of the sector in the year 2000. But the market continues to be significantly under-penetrated in comparison with other countries. For instance, per capita private health insurance in India is estimated at $ 1.1 in comparison with $ 2300 in the US or US $ 63 in Brazil. Health insurance accounts for less than 3% of healthcare spend in India in comparison with China’s 5%.
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Over the next 5 years, the market is projected to grow at 25-30% thereby making it the fastest growing segment in the general insurance market.