How Rakesh Jhunjhunwala Gained ?6,000 Crore On A Stock Whose IPO Investors Are Staring At Losses?

India¡¯s big bull and ace investor Rakesh Jhunjhunwala is someone who occupies the country¡¯s pink paper headlines quite frequently, right? Whatever he does, whether it's a rejig of his portfolio, purchasing or selling stocks or even putting forth his take on market prediction, everything is keenly followed by lots of investors in our country. But this time, he has turned everyone¡¯s heads for a slightly different but not surprising reason.

Recently, Rakesh Jhunjhunwala earned a staggering profit of around ?6,000 crores on a stock whose IPO investors are at present not only failing to gain profit but in fact, are staring at losses.

His investment in Star Health Insurance

Rakesh Jhunjhunwala is a promoter in Star Health and Allied Insurance, along with Safecrop Investments India and Westbridge AIF. He owns a 14.98% stake in Star Health, totalling 8.28 crores equity shares.

According to Star Health¡¯s Red Herring Prospectus (RHP), Rakesh Jhunjhunwala acquired his 14.98% stake in the company in a staggered manner, purchasing shares between March 2019 and November 2021.

Besides Rakesh Jhunjhunwala, his wife Rekha Jhunjhunwala also owns 1.78 crore equity shares of the company, i.e. 3.23% stake in Star Health and Allied insurance, which is valued at ?1,454 crores.

Also Read: Billionaire Rakesh Jhunjhunwala Spends Rs 371 Crore To Buy A Building Only To Tear It Down!

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The IPO Show

As per the RHP of Star Health Insurance's IPO, the average purchase price of Rakesh Jhunjhuwala-owned 8.28 crore shares is just Rs 155.28 per share, i.e. an approximately 83% discount from the upper end of the IPO price band at ?900. Jhunjhunwala's earnings skyrocketed when the company's shares touched the ?940 mark in intraday trading on Dec 10th 2021.

Otherwise, in what¡¯s been seen as a tepid debut, Star Health and Allied Insurance Company¡¯s stock had opened on the listing day of 10th December 2021 at ? 848 on the BSE, while the opening price on the National Stock Exchange(NSE) was ? 845, down from its IPO price band of ?870-900. This disappointed a lot of allottees, who expected a better show from this much-anticipated listing of Star Health.

While Star Health¡¯s share prices did show some recovery, it is again on a downfall, closing at a much lower price of ?799 on 23rd December 2021. Certainly, a majority of its IPO investors who had pinned high hopes from this investment must be feeling disappointed with the current show. Being hopeful of an improvement through a rise in share price is all they can do at present.

Also Read: Flipkart IPO Likely To Come Out Next Year, Says Group CEO Kalyan Krishnamurthy

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