India"s largest private health insurer Star Health will cut the offer for sale portion of its IPO after the offering received a tepid response in its subscription period ending on Thursday, a source said. The IPO was subscribed at just 79%, getting bids worth $427.37 million, despite it extending the subscription period for its offering. The company was aiming to raise 72.49 billion rupees at a nearly $7 billion valuation. read more "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. Several analysts pointed to worries over the Omicron coronavirus variant and a possible surge in cases and what that could mean for the company. "COVID-19 has dented their profitability to a great extent as (their) combined ratio has risen," said Madhukar Ladha, equity research analyst at Elara Capital. The combined ratio, a key profitability metric for an insurance firm"s underwriting business, measures the incurred losses and expenses in relation to total premiums collected. "(Star) suffered losses in the past too because of the impact of claims related to COVID-19 (and) this could have also dampened response for its IPO," Amarjeet Maurya, associate vice president of mid-caps at brokerage Angel One, told Reuters late on Thursday. The appetite for very large IPOs in India has also taken a beating after digital payments firm Paytm"s (PAYT.NS) dismal stock market debut last month which sparked concerns about overvaluation in domestic equities. read more "The problem was that (Star) was asking for a high valuation. So most of the mutual funds didn"t show any interest. That is one of the reasons it was undersubscribed," said Santosh Meena, head of research at Swastika Investmart Ltd, adding that the change in market sentiment after Paytm"s failure was also a factor. Other large offerings planned for later this year and the next include Softbank-backed (9984.T) firms Delhivery and OYO, which have filed draft papers for a $992.73 million and $1.12 billion IPO, respectively, and state-owned life insurance giant LIC, whose IPO is expected to be India"s biggest. "Large IPOs could face headwinds going forward especially if they are seen as valued highly, leaving little on the table for IPO applicants," said Deepak Jasani, head of retail research at HDFC Securities. "Retail investors would prefer applying in smaller IPOs from companies with a sound business model," Jasani added. Since Paytm"s dismal listing, demand has remained strong for much smaller IPOs from companies with established businesses. Last month, KFC and Pizza Hut restaurants operator Sapphire Foods India (SAPI.NS) surged in its market debut after raising $276 million, while data analytics firm Latent View (LATN.NS) more than doubled in its listing after raising $80 million.