Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company disappointed investors on Friday when its shares came in at Rs 848.8 on BSE, a discount of 6.11 from the price of Rs 900 per share. At NSE, Star Health Shared opened at Rs 845, a 6.11 percent discount off the issue price.
Founded in 2006, Star Health & Allied Insurance Company is one of the largest private health insurers in India with a market share of 15.8 percent in fiscal year 2021. The insurance company aimed to bring in Rs 7,249.18 through this initial offering. Star Health IPO consisted of a new share issue worth Rs 2,000 crore and an offer for sale (OFS) of 5.83 crore shares by various shareholders.
Star Health IPO saw muted subscription from the investors during the offering period. Analysts pointed to a high valuation behind the subdued sentiment in the IPO. Star Health IPO received bids of more than 3.56 crore shares against the total issue size of more than 4.49 crore shares, data available from the National Stock Exchange (NSE) showed. Shares allocated to qualified institutional buyers (QIBs) were subscribed 1.03 times, those of non-institutional investors were subscribed 0.19 times and those of private individual investors (RIIs) were subscribed 1.10 times. Separately, 0.10 times were subscribed to the employee segment.
Abhay Doshi, founder of UnlistedArena.com, previously predicted a lukewarm entry for Star Health IPO given the muted subscription during the listing. He said: “Because D-Street is witnessing rain of IPOs, mixed and selective subscription to various issues. Star Health Insurance received a very lukewarm response as other IPOs became highly oversubscribed. The lukewarm response was mainly due to at higher prices, causing investors to be wary and potentially making their debut for lack of lust. The stock can trade at a discount of 5-10 percent, disappointing the allotments.”
The company offers a range of flexible and comprehensive coverage options, primarily for retail healthcare, group health, personal accident and overseas travel. Retail health and group health accounted for 87.9 percent and 10.5 percent of total GWP in FY21. In FY21 and the first half of FY22, it had a total gross written premium (GWP) of Rs 9,348.95 crore and Rs 5,069.78 crore respectively. Private health insurance will be a key growth engine for the health insurance industry in India, especially after the COVID pandemic.
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