The initial public offer (IPO) of Star Health and Allied Insurance Company, which has among its biggest shareholders well-known investor Rakesh Jhunjhunwala and his wife Rekha, just about managed to pass muster with a 79 per cent subscription on the back of a forced reduction in the offer for sale component.
Data from BSE shows that the public issue got subscribed 0.79 times with bids received for 3.6 crore equity shares as against 4.5 crore shares on offer in the price band of ?870 to ?900.
While the portions reserved for qualified institutional buyers (QIBs) and retail investors got fully subscribed, the other segments – high net worth individuals and employees – failed to see enough traction.
The QIB portion was subscribed 1.03 times though mutual funds did not put in a single bid. All the bids came from either foreign portfolio investors or domestic financial institutions that include banks and insurance companies among others. Foreign investors, however, accounted for nearly 90 per cent of all the bids in the QIB portion.
Since the insurance major did not meet the profitability criteria, a successful IPO required at least 75 per cent subscription from institutional investors. Such companies are allowed to reserve only 10 per cent of the offering for retail investors instead of the 35 per cent that can be offered to such investors by companies that are profitable.
Interestingly, employees who were being given a discount of ?80 per share did not show much interest as the segment was subscribed a mere 10 per cent.
Jhunjhunwala and his wife Rekha are the second-largest shareholders in the company with 18.21 percent stake. Safecrop Investments India LLP is the biggest shareholder with 47.77 percent stake in the company.
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Also Read: Rakesh Jhunjhunwala-backed Star Health IPO subscribed 79% on last day
