The initial public offering of Rakesh Jhunjhunwala-backed Star Health and Allied Insurance Company was subscribed 79 percent on December 2, the third and final day of bidding. The offer received bids for 3.6 crore equity shares against the IPO size of 4.5 crore equity shares.
The portion reserved for retail investors was subscribed 1.1 times, and that for non-institutional subscribers 19 percent. Qualified institutional buyers subscribed to one times of their reserved portion.
Star Health is a Chennai-based insurance company, backed by the Big Bull and PE firm West Bridge Capital. The IPO is estimated at Rs 7,249 crore, including an offer for sale worth over Rs 5,200 crore and a fresh issue of Rs 2,000 crore.
The price band for the offer was Rs 870-900 apiece. Brokerages recommended subscribing to the IPO, but with caution. Choice Broking said that at the upper end of the price band, Star Health is demanding a market cap to the net premium earned multiple of 10.3 times, which sits at a premium as compared to the peers. Moreover, the brokerage said, "the demanded valuation is at an elevated premium to recent capital issuance."
Angel One, on the other hand, recommended subscribing to the issue as the company stands out among other standalone health insurers. It said the size and growth rate of the firm is better than peers. It also has a better operational performance, which was reflected in the pre-COVID numbers of the company, it said.
"The valuations commanded by Star Health at around 5.5 times FY21 MCAP/GWP are in-line with recent deals in the standalone health insurance space and appear fair considering its positioning," Angel One said.
(Edited by : Yashi Gupta)
First Published: Dec 2, 2021 12:58 PM IST
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