How was the overall subscription for Star Health and what happens now?

It was the big disappointment in the market as it failed to even get fully subscribed despite being backed by the formidable Rakesh Jhunjhunwala. At the close of the IPO, out of 449.09 lakh shares on offer in the IPO, Star Health could muster bids for just about 355.85 lakh shares. This means subscription was just about 0.79X or 79%. HNIs and NIIs largely disappointed the markets with their total absence from the issue.

The anchor response had been quite good for Star Health & Allied Insurance collecting a decent Rs.3,217 crore, with a long roster of big global names. However, at close of the third day, the QIB portion (net of anchor) had an available quote of 238.31 lakh shares but got bids for just about 244.93 lakh shares implying subscription rate of just about 1.03X. The QIB portion also just about got subscribed and the pricing and size was just too optimistic.

The disappointment was the HNI portion with 0.19X or 19% subscription. It got applications for just about 22.76 lakh shares against the quota of 119.15 lakh shares. Even funded applications were absent as the cost of funds would have struggled to cover. The retail portion just about got through at about 1.10 times. Out of the 79.44 lakh shares on offer, valid bids were received for 87.00 lakh shares.

So what happens to the issue. One choice the promoters have is to withdraw the issue and refund the monies. The other option is to curtail the size of the issue. The company will look at reducing the OFS size to a more acceptable level to bridge this gap.