WestBridge Capital Kicks Off Exit Process From Star Health Insurance

Private equity firm WestBridge Capital has started the process of selling its stake in Star Health and Allied Insurance, setting the stage for what could be one of the largest secondary market transactions in India's insurance sector, according to Moneycontrol.

Based on the June quarter shareholding pattern, WestBridge Capital holds about a 40% stake in Star Health through its investment vehicle, Safecrop Investments India LLP.

A few weeks ago, WestBridge invited expressions of interest from investment bankers to run the sale process, and JP Morgan may have emerged as the preferred banker, Moneycontrol reported. "Given that the quantum of share held is huge, the idea is to explore multiple options for an exit," a source cited by the publication said.

Star Health Insurance told Moneycontrol that it does not comment on market speculation. The company said any decision relating to a shareholder's investment is entirely a matter for the shareholder, and that it remains focused on executing its business strategy and creating long-term value for all stakeholders.

WestBridge Capital had floated a general insurance company along with industry veterans Neelesh Garg and Saurav Jaiswal in November 2024, named Kiwi General Insurance. The company recently received approval from insurance regulator IRDAI to begin operations.

WestBridge is currently recognised as a promoter in both Star Health Insurance and Kiwi General Insurance. However, IRDAI licensing norms permit a promoter to hold only one insurance license, similar to how the banking industry operates. People cited in the report said that with Kiwi General Insurance now operational, WestBridge would not be able to remain a promoter in two companies, prompting it to consider an exit from Star Health. Prudential PLC had earlier given up its promoter status in ICICI Prudential after acquiring a 75% stake in Bharti Life Insurance.

Early Bet on Insurance Sector

WestBridge was among the few private equity players to make an early bet on India's insurance sector. In 2018, the firm, along with consortium partners Madison Capital and the late Rakesh Jhunjhunwala, acquired a significant majority stake, possibly over 90%, in Star Health Insurance. This included the stake held through Safecrop Investments and stakes held individually by Jhunjhunwala and WestBridge Capital.

When the company went public in December 2021, Safecrop Investments reduced its stake in the insurer from 48-49% to 41%, according to news reports. Since the IPO, promoters have continued to reduce their holdings in Star Health.

Notably, Rekha Jhunjhunwala, wife of late Rakesh Jhunjhunwala, has significantly reduced her stake in the June FY27 quarter. Her holding fell to 3.04% from 15.57% in the March FY26 quarter, implying the sale of nearly 7.38 crore shares, likely through the open market.

The latest filing also showed that the promoter holding under Rakesh Jhunjhunwala and Associates fell to zero, pointing to a substantial reshuffle in the promoter shareholding pattern.