Rakesh Jhunjhunwala-Backed Star Health Ends Higher After Listing At 5.7% Discount
Shares of Star Health & Allied Insurance Co. closed higher despite billionaire investor Rakesh Jhujhunwala-backed company listing at a discount after its initial public offer fell short of its target.
The stock listed at Rs 849 apiece, a 5.69% discount to its IPO price of Rs 890 apiece. As of 2:15 p.m., the scrip erased all opening losses to trade at Rs 898 apiece, up 0.9% from its IPO price. The stock ended Rs 900.1 apiece, 1.13% higher.
Bidding for shares of the private insurer was extended after the issue wasn’t fully subscribed. According to market regulations, if an issue is through mandatory book building route, at least 75% of the net offer must be allotted to qualified institutional buyers. The company shall refund the subscription money if the minimum subscription for QIBs isn’t attained.
In the case of Star Health, the QIB portion was fully subscribed, besides retail. Hence, the issued sailed through with over 93.11 lakh shares undersubscribed.
Jhunjhunwala, one of the promoters, didn’t dilute stake in the company.
Investors are turning increasingly skeptical about IPOs as a record year for Indian listings draws to a close. Last month, One97 Communications Ltd., operator of the digital payments service Paytm, made one of the worst debuts ever by a major technology company as analysts raised concerns about its profitability and investors balked at high valuation.
Indian IPOs that have raised at least $500 million this year, according to Bloomberg data, have risen an average 17% on their first day of trade.