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Medi Assist Healthcare files IPO papers with SEBI; public issue entirely an offer-for-sale

The public issue will be entirely an offer of sale of up to 2.8 crore equity shares of Medi Assist by promoters and existing shareholders

Medi Assist Healthcare Services has filed Draft Red Herring Prospectus with capital markets regulator Securities and Exchange Board of India (Sebi) to launch an IPO (initial public offer. The public issue will be entirely an offer of sale of up to 2.8 crore equity shares of Medi Assist by promoters and existing shareholders. Those selling shares in the offer for sale include Dr Vikram Jit Singh Chhatwal, Medimatter Health Management, Bessemer India Capital Holdings II Ltd, Bessemer Health Capital LLC and Investcorp Private Equity Fund I.

For financial 2020, the Bengaluru-based Medi Assist Healthcare managed Rs 7,829.5 crore of health insurance premiums. Medi Assist is a health tech and insurtech company focused on administering health benefits across employers, retail members and public health schemes. Axis Capital, Edelweiss Financial Services, IIFL Securities and SBI Capital Markets have been appointed as merchant bankers to advise the company on the IPO. Link Intime India Private Ltd is the registrar to Medi Assist Healthcare issue.

The company has no listed companies in India that engage in a business similar to that of Medi Assist and its subsidiary. Under TPA (third party administrator) Medi Assist’s primary clients include insurance companies, it also serves as an intermediary between general and health insurance companies and the insured members (under retail, corporate and insurance backed public health insurance policies), insurance companies and healthcare providers (such as hospitals), and the government and beneficiaries of public health schemes.

TPAs process insurance claims on behalf of insurance companies. They contract with insurance companies and ensure better services to policyholders. The risks, premium rates, and marketing remain with the insurer. The Indian healthcare insurance market is experiencing high growth. The objectives of the offer are to carry out the OFS of up to 2.8 crore equity shares by the selling shareholders; and achieve the benefits of listing the equity shares on the stock exchanges. The company has informed that it will not receive any proceeds from the offer and all such proceeds will go to the selling shareholders.

Penetration of health insurance (lives covered as percentage of total population) in India grew from 22.2 per cent in 2014-2015 to 36.5 per cent in 2019-2020 and is expected to reach 55 per cent by 2024-2025. According to DRHP, only 10 per cent of the total population in India is covered by health insurance (excluding public schemes), which results in higher out-of-pocket expenditure for the majority of the population. Due to increasing awareness after COVID-19 pandemic, it is expected that more people will likely subscribe for health insurance, as well as corporations having a higher employee health focus. Health insurance penetration is expected to reach 16.5% in 2024-2025.

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