The initial public offering (IPO) of Star Health & Allied Insurance Co Ltd sailed through on the final day, after struggling to gather demand for all the shares on offer which saw the company reduce its issue size.
The Rakesh Jhunjhunwala backed firm managed to raise approximately Rs 6410.18 crore from investors, against its original target of Rs 7249.18 crore.
"Right now Rs 3217 crore anchor plus Rs 3193 crore has been subscribed and this will be the approximate final size," a person familiar with the details said.
“Under Sebi norms, the subscription received must be enough to cover the primary share sale component, which is Rs2,000 crore in this IPO and achieve a minimum 10% shareholding dilution. The Qualified Institutional Buyers (QIB) portion should see a certain minimum subscription and in this case the QIB part is subscribed more than 100%. These conditions have been met and so the IPO has closed successfully,” he added.
Earlier, the IPO extended timing for individual investors till 7pm after receiving bids for only 80% of shares on offer at 5pm.
Retail investors placed bids for 1.08 times the shares reserved for them. Non-institutional investors bid for 0.18 times of their quota while institutional investors subscribed 1.03 times.
Last week, in an interaction with Mint, the Star Health senior management mentioned that it believes that new investors will find the valuation “very comfortable" given the company’s growth prospects, its business model and market position.
“The valuation has been arrived at scientifically looking into various factors. Definitely we believe this valuation will be very comfortable for the new investors also. But we are more focused on the long term growth and we believe that we’ll be able to deliver the results in the long term," said Anand Roy, managing director, Star Health in an interview.
The company sought a valuation of around Rs50,000 crore at the upper end of Rs 900 per share.
The health insurer’s IPO consisted of a fresh issue of Rs 2000 crore and an offer for sale of upto 58.32 million shares by its existing promoters and shareholders.
The OFS includes up to 30.68 million shares by Safecrop Investments India LLP, which is a consortium of investors including Rakesh Jhunjhunwala, Madison Capital and Westbridge Capital.
Other selling shareholders included 7.68 million shares by Apis Growth 6 Ltd which is managed by Apis Partners, upto 7.44 million shares by University of Notre Dame DU LAC, upto 4.11 mln shares by MIO IV Star, upto 4.11 mln shares by MIO Star, upto 2.51 mln shares by ROC Capital Pty Ltd.
The IPO which kicked off on Tuesday was subscribed 12% at the end of day one and 20% on day two.
Last time in 2018, ICICI Securities had cut its IPO size to Rs3,520 crore from the original target of Rs4,017 crore because of poor investor interest.
Star Health did not respond to a request for comment.