Rakesh Jhunjhunwala failed to spot this investment opportunity? Big mistake turns costly
Rakesh Jhunjhunwala, who is among the frontrunners in the race to buy India’s largest standalone health insurer Star Health & Allied Insurance Company, was once offered the company at one-third of the price the Big Bull is looking at paying now.
Ace investors may not always judge a company's worth correctly all the time or perhaps there were other extraneous reasons that distracted or turned them off. This stands true for India's legendary investor Rakesh Jhunjhunwala too! The market guru may well have missed an opportunity when it was offered on a plate to him, and now he is in the race to gain it back.
It looks like Rakesh Jhunjhunwala, who is among the frontrunners in the race to buy India’s largest standalone health insurer Star Health & Allied Insurance Company, was once offered the company at one-third of the price the Big Bull is looking at paying now along with other private equity investors. A report in Economic Times said, quoting an unnamed source, that Jhunjhunwala was offered Star Insurance at less than Rs 2000 crore a few years ago.
Earlier in June ET had reported that Rakesh Jhunjhunwala along with WestBridge Capital and Madison is likely to buy 93.99 per cent in Star Health Insurance at a whopping valuation of Rs 6,500 crore!
“The agreement will be signed in the next few days,” reported ET, quoting a source. “They will buy out 93.99 per cent, valuing the company at Rs 6,500 crore. The remaining 6.01 per cent will be with two individual shareholders of ETA Trading,” the source added.
WestBridge will likely own 51 per cent, Jhunjhunwala 33 per cent and Madison 16 per cent.
ICICI Lombard has reportedly pulled out of the race to buy Star Health due to differences over valuation.
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In a recent interview with CNBC TV18, Jhunjhunwala said that he is expecting a closure on the insurance deal by the end of this month or first week of July.
On asking if he is looking at more such deals in insurance space, Rakesh Jhunjhunwala accepted that there are things on the horizon but much smaller.
"I don’t have that kind of money to put in so many other companies and I am looking at a lot of opportunities but they are much smaller," he said.