Indian insurer Star Health cuts IPO size after tepid subscription

MUMBAI: India’s largest private health insurer Star Health will cut the offer for sale portion of its IPO after the offering received a tepid response in its subscription period ending on Thursday, a source said.

The IPO was subscribed at just 79%, getting bids worth $427.37 million, despite it extending the subscription period for its offering. The company was aiming to raise 72.49 billion rupees at a nearly $7 billion valuation.

“The retail and institutional part was fully subscribed but that wasn’t the case for HNIs (High Net-worth Individuals). We saw a tepid response from HNIs and so there has been about a $100 million shortfall. So as a result, the offer for sale size will be reduced to the extent of the undersubscribe portion,” said a source.

Star Health did not immediately respond to a request from Reuters for comment. Several analysts pointed to worries over the Omicron coronavirus variant and a possible surge in cases and what that could mean for the company.

“COVID-19 has dented their profitability to a great extent as (their) combined ratio has risen,” said Madhukar Ladha, equity research analyst at Elara Capital.