Star Health Insurance Files DRHP For IPO

INTRODUCTION: What is an IPO?

IPO is referred to as Initial Public Offering. It is a process used by private companies to raise their capital. It is a turning point for them to become public and get their shares listed on the stock exchange. In an IPO, the company creates new shares for the public. It thus issues shares to the public for the very first time.

To hold an IPO, the company must satisfy the requirements mandated by the Securities Exchange Board of India (SEBI). It must file a Draft Red Herring Prospectus (DRHP) before holding an initial public offering.  

What is DHRP?

DHRP refers to Draft Red Herring Prospectus. Every company has to go through the process of preparing a DRHP and filing it with SEBI 21 days before holding an IPO. DRHC contains all relevant information on the issuing company, such as:

-     The company's objective;

-     Financial information and statements of the company;

-     Brief Profile of the company, its promoters, and their expenses;

-     Terms of the offer;

-     Such other information is to be made available to the general public.

Before investing in an IPO of a company, you must carefully read the DRHC of the issuing company. DHRP gives you an insight into the company's past performance and its potential to expand its business in the market. It acts as a brochure to the public.

On 21^st July 2021, Star Health and Allied Insurance Company Limited filed DHRP with SEBI for its IPO. Their DHRP consists of nine sections and provides an overview of the company.  You can access their DHRP on the official website of SEBI at https://www.sebi.gov.in/filings/public-issues/jul-2021/star-health-and-allied-insurance-company-limited-drhp_51323.html.

Let us now look at a few things before investing in star health insurance IPO to help you make this informed decision.

THINGS TO KNOW ABOUT STAR HEALTH INSURANCE IPO:

·  COMPANY PROFILE:  

Star Health and Allied Insurance Compay Limited ("SAHI") is India's leading private health insurer. It was founded in 2006 with an object to provide retail health and insurance policies. According to CRISIL Research, SAHI has a 15.8% market share in the Indian health insurance market with a total Gross Written Premium of Rs. 93,489.50 million. They offer services ranging from retail health, group health, travel insurance and, accident care.

·  IPO OFFER:

The company's IPO comprises Fresh Issue and an Offer For Sale (OFS) by existing stakeholders with a 100% book-building procedure. The DRHC lays down the offer procedure, the bid process, and the price of each equity share. It also declares and lays down the rights of the equity shareholders.

·  OBJECT OF THE IPO:

Every company's DHRP mentions its object behind IPO. You must always read the purpose behind the issuance of their IPO. It will help you get an insight into the business ideas and their plans of expansion. Star health's IPO will be issued with an object to utilize the net proceeds towards funding their capital, undertaking their existing business activities and, maintaining solvency. It aims to create a brand image among its current and potential customers.

·  COMPANY'S INDUSTRIAL GROWTH:

According to CRISL Research, the company was consistently ranked first in the health insurance market for three years. It has seen industrial growth over the last two years due to the COVID-19 pandemic, and claims have increased. The demand for term and health insurance has witnessed a steep rise in the pandemic. People are becoming more aware of the health sector and its infrastructure in India. Thus, SAHI will continue to lead as a private health insurer.

CONCLUSION:

Star health IPO will be a milestone for SAHI. It will be amongst the four insurance providers to be listed on the stock exchange. With over 12,800 employees and around 640 branch offices in India, SAHI will continue to emerge as a growing health insurer. Its IPO will pave a new road for investors to earn handsome returns and prestige in the stock market.