Star Health, Largest Private Health Insurer, Cuts IPO Size

Star Health will cut the offer for sale portion of its IPO after the offering received a tepid response in its subscription period ending yesterday, according to a source.

The IPO of the country's largest private health insurance firm was not fully subscribed by the close of bidding on Thursday, signalling that demand for IPOs in India could be waning.

It was subscribed at just 79 per cent, getting bids worth $427.37 million, despite it extending the subscription period for its offering.

"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.

The institutional investor and retail segments were fully subscribed, at 1.03 times and 1.1 times respectively, but bids for them were far lower than in previous offerings such as Nykaa.

"The general feedback that we are getting right now is that the pricing was a bit too high. And possibly something should have been left for the investors on the table," the source said.

Incorporated in 2005, Star Health offers coverage options for retail health, group health, personal accidents and overseas travel insurance.

Since Paytm's dismal listing, demand has remained strong for much smaller IPOs from companies with established business models.

Last month, KFC and Pizza Hut restaurants operator Sapphire Foods India surged in its market debut after its $276 million IPO was oversubscribed 6.62 times.

Data analytics firm Latent View more than doubled in its listing after investors bid more than 300 times for the shares it offered in its $80 million IPO.