Medi Assist to buy Paramount in key TPA play

MUMBAI: In one of the largest deals in the health administration space, Medi Assist has acquired Paramount TPA, owned by Fairfax and Nayan Shah, at an enterprise value of Rs 312 crore and an equity value expected to exceed Rs 400 crore.

This marks the fifth acquisition by Medi Assist which manages and services health claims on behalf of insurance companies. It had previously acquired Raksha TPA a year ago and followed that with an IPO this year. Paramount, which began operations in 1996, is a pioneer in the health administration business.

Paramount works with 30 insurers and has 3,000+ group customers and retail policyholders. The acquisition will increase Medi Assist's market share from 30% to 37% in the group health business and from 20% to 24% at the industry level. The final value of the deal would be after factoring in the free cash available.

According to Satish Gidugu, director and CEO of Medi Assist Group, it takes four quarters to complete the integration after acquisition because insurance contracts are renewed annually. However, operationally, the integration with Raksha is complete, and the integration of Paramount would be easier given that the company now has a "playbook". "There is nothing holding us back on this deal. I think that with the recent push on health insurance, we thought the consolidation will actually help the whole industry," said Gidugu.

"The investments we made in technology, particularly in the machine learning side of it, are delivering far superior outcomes to insurers," said Gidugu.

Medi Assist was promoted in 2000 and received funding from Nadathur Holdings, a private equity firm owned by Infosys co-founder N S Raghavan. In 2006, the company was acquired by Anil Ambani's Reliance Group (ADAG) through Reliance Health Ventures. The company was subsequently acquired by the present promoters, Vikramjit Singh Chatwal, and Bessemer Ventures.


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