Star Health and Allied Insurance Co Ltd"s initial public offering (IPO) failed to get fully subscribed by the close of bidding on Thursday, signalling weak investor demand for India"s third-biggest listing this year. The IPO of the country"s largest private health insurance firm was subscribed just 79%, getting bids worth $427.37 million, despite it extending the subscription period for its offering. Backed by billionaire stock investor Rakesh Jhunjhunwala, the company had priced its 72.49 billion rupees ($968.82 million) IPO between 870 rupees and 900 rupees per share. A banking source told Reuters the firm was aiming for a nearly $7 billion valuation. read more The weak response comes just weeks after digital payments firm Paytm"s (PAYT.NS) dismal stock market debut sparked concerns about overvaluation in domestic equities. read more Indian shares have retreated more than 6.5% from their October record highs, with the latest selloff on Friday sparked by worries over the new Omicron coronavirus variant. "The new COVID-19 variant has weighed on the sentiment around Star Health"s IPO and a potential spike in claims from subsequent covid waves spilling over into FY23 is prompting investors to sit on the sidelines," said Amarjeet Maurya, associate vice president of mid-caps at brokerage Angel One. Non-institutional investors, which include corporates, bid just 0.19 times the shares reserved for them. 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 (FSNE.NS). Star Health had already raised 32.17 billion rupees from over 60 anchor investors, including the Singapore government and Abu Dhabi Investment Authority. Jhunjhunwala, who owns a near 15% stake in the company, has not put up any shares for sale in the offering. Incorporated in 2005, Star Health offers coverage options for retail health, group health, personal accidents and overseas travel insurance. ($1 = 74.8230 Indian rupees) Reporting by Shivani Singh in Bengaluru, Editing by Uttaresh V and Aditya Soni