Star Health IPO | Promoter Rakesh Jhunjhunwala is the second largest shareholder in the company.
The public offer of Star Health and Allied Insurance Company has so far received lukewarm response from investors with subscription at 20 percent, garnering bids for 89.67 lakh equity shares against an issue size of 4.49 crores, on December 1, the second day of bidding.
The insurance company is promoted by investor Rakesh Jhunjhunwala, Safecrop Investments India LLP and WestBridge AIF.
Retail investors bought shares 89 percent of their reserved portion, while the employees' segment saw 5 percent subscription. Non-institutional investors have bid for 2 percent of shares set aside for them, while qualified institutional buyers picked up 15.82 lakh shares as against their reserved portion of 2.38 crores.
On its first day of bidding, the offer was subscribed 12 percent .
Up to 75 percent of the offer size is reserved for qualified institutional buyers, 15 percent for non-institutional investors and the remaining 10 percent for retail investors.
Star Health plans to mobilise Rs 7,249.18 crore through its public issue that comprises fresh issuance of shares worth Rs 2,000 crore and an offer-for-sale of Rs 5,249.18 crore by several selling shareholders, including promoter Safecrop Investments India LLP.
The company mopped up Rs 3,217.13 crore from anchor investors on November 29 and, as a result, the issue size has been reduced to 4.49 crore equity shares from 8.14 crores earlier.
The net proceeds from fresh issue will be used in augmenting a capital base and maintain solvency levels.
The price band for the offer, which closes on December 2, has been fixed at Rs 870-900 per share.
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"The health insurance sector is likely to flourish as individuals become more aware of the benefits of health insurance. If we look at the company's financials, we can see that it was doing well until COVID hit last year. The company has the largest market share, which is positive for the company, however the industry is getting competitive," said Swastika Investmart.
"The valuation of the company is stretched. At the upper price band of Rs 900, Star Health is demanding a market capitalisation to net premium earned multiple of 10.3x, which is at a premium to the peer average. Thus, we assign a 'subscribe' rating only for the long term," the brokerage added.
Star Health claimed to be the largest private health insurer in India with a market share of 15.8 percent in the Indian health insurance market in FY21.
In FY21, it had total gross written premium (GWP) of Rs 9,348.95 crore. Retail health and group health accounted for 89.3 percent and 10.7 percent, respectively, of its total health GWP in FY21.
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