Star Health IPO subscribed 79% on final day of bidding with QIB portion fully booked

#IPO - Issues Open, Star Health and Allied Insurance Company

Star Health IPO | Promoter Rakesh Jhunjhunwala is the second largest shareholder in the company.

Marquee investor Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company closed the public issue on December 2 after witnessing 79 percent subscription to the IPO.

The Rs 7,249 crore public issue has garnered bids for 3.56 crore equity shares against offer size of 4.49 crore equity shares. Remember the issue size has been reduced to 4.49 crore equity shares from 8.14 crore shares earlier as the company already raised Rs 3,217.13 crore from anchor investors at Rs 900 per share, the upper price band.

The issue was opened for subscription on November 30.

Qualified institutional buyers (QIBs), who are the key investors in every public issue, has to bid at least up to 90 percent of their total reserved portion. Their portion got through on last day, subscribing 1.03 times. A 75 percent of the total offer size was reserved for QIBs.

Retail investors put in bids 1.1 times the portion set aside for them, while the allotted quota of non-institutional investors (NIIs) and employees remained undersubscribed, at 19 percent and 10 percent subscription, respectively.

Generally, if the issue is entirely a fresh issue then it has to get at least 90 percent subscription, except in case of offer for sale of securities, as per the Sebi rule. As the QIB and retail portions got fully subscribed, the IPO size will get reduced to the extent of final under-subscription in non-institutional investors and employee reservation categories, say analysts.

“The minimum subscription to be received in the issue shall be at least 90 percent, of the offer through the offer document, except in case of an offer for sale of specified securities: Provided that the minimum subscription to be received shall be subject to the allotment of minimum number of specified securities,” as per the Sebi regulations.

The regulation further says, in the event of non-receipt of minimum subscription, all application monies received shall be refunded to the applicants forthwith, but not later than 15 days from the closure of issue.

The Rs 7,249 crore public issue comprised a fresh issue of Rs 2,000 crore, and an offer for sale of Rs 5,249 crore by selling shareholders, including Safecrop Investments India LLP, the promoter and major shareholder in the company.

As per the current status, the anchor portion was Rs 3,217.13 crore and the current subscription was Rs 3,193.05 crore. The balance portion of Rs 839 crore remained undersubscribed. So after the final adjustment, accordingly the company will reduce the offer for sale size to the extent of undersubscribed portion.

Star Health Insurance, one of the largest private health insurers in the country with a market share of 15.8 percent in the Indian health insurance market as of FY21, with a total gross written premium (GWP) of Rs 9,348.95 crore in FY21, is going to utilise the net proceeds from its fresh issue towards augmenting its capital base and insolvency level.

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