Upcoming IPO: Niva Bupa Health To Open For Subscription On November 7; All You Need To Know

The IPO season continues to gather momentum as Niva Bupa Health Insurance Company, one of India's largest standalone health insurers (SAHI), gears up to launch its highly anticipated Initial Public Offering (IPO). Slated to open for subscription on November 7, 2024, the Rs 2,200 crore IPO consists of a fresh equity issue and an offer-for-sale by promoters.

IPO Details

Niva Bupa Health Insurance's IPO comprises a fresh issuance of equity shares worth Rs 800 crore, coupled with an offer-for-sale (OFS) by existing promoters valued at Rs 1,400 crore. Of this OFS component, Bupa Singapore Holdings Pte will divest shares worth Rs 350 crore, while True North's Fettle Tone LLP will offload Rs 1,050 crore in equity.

This IPO provides existing promoters with an opportunity to pare their stakes in Niva Bupa. Currently, promoters hold 89.07% of the company's shares, with Bupa Singapore's stake standing at 62.19% and Fettle Tone LLP's at 26.80%. After the IPO, True North's Fettle Tone LLP will no longer be categorized as a promoter and will instead assume the status of an investor, in line with regulatory requirements from the Insurance Regulatory and Development Authority of India (IRDAI).

Subscription Details and Timelines

The IPO will be available for public subscription from November 7 to November 11, with the anchor book opening for institutional investors on November 6. The final price band for the IPO is expected to be revealed by November 4. Following the close of the IPO, allotments will be determined on November 12, and shares will be credited to eligible investors' demat accounts on November 13. The anticipated listing date for Niva Bupa Health Insurance shares on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) is November 14.

Once listed, Niva Bupa will join the ranks of other publicly traded health insurers in India, including Star Health and Allied Insurance, ICICI Lombard General Insurance, and The New India Assurance Company. This makes it the fourth health insurer available for retail and institutional investors on the Indian stock market.

Key Financials

Gurugram-headquartered Niva Bupa Health Insurance has made significant strides in the Indian health insurance market. For the fiscal year 2024, the company reported a net profit of Rs 81.85 crore, a rise from Rs 12.5 crore in the previous fiscal year. However, its operating profit for FY24 decreased sharply to Rs 188 crore from Rs 350.9 crore year-over-year.

During the three-month period ending June 2024, Niva Bupa posted a loss of Rs 18.8 crore, an improvement from a Rs 72.2 crore loss in the year-ago quarter. Despite this, the company's operational performance showed positive signs, with an operating profit of Rs 23.2 crore, reversing an operating loss of Rs 13.4 crore during the same period last year.

Niva Bupa's gross written premium (GWP) growth further underscores its market resilience. The company's GWP grew at a compound annual growth rate (CAGR) of 41.27% between FY22 and FY24, with retail health premiums growing at a CAGR of 33.41%. For the quarter ending June 2024, its GWP rose by 30.84% compared to the same period last year. As of FY25, Niva Bupa commands a 17.29% market share in the SAHI sector, up from 16.24% in FY24.

How IPO Proceeds Will Be Utilized

The Rs 800 crore from the fresh equity issue will be allocated to bolster Niva Bupa's capital reserves, ensuring the company's solvency levels remain robust. This capital injection will help the insurer meet future regulatory requirements and enable further expansion to serve a wider customer base across the country.

Stakeholders and Lead Managers

Among Niva Bupa's public shareholders, India Business Excellence Fund IV holds a 2.81% stake, followed by V-Sciences Investments Pte with a 2.60% stake. Other shareholders include SBI Life Insurance Company (1.3%) and A91 Emerging Fund II LLP (1.03%).

The IPO is being managed by a strong consortium of lead book-running managers, including ICICI Securities, Morgan Stanley India Company, Kotak Mahindra Capital Company, Axis Capital, HDFC Bank, and Motilal Oswal Investment Advisors. KFin Technologies has been appointed as the registrar for the IPO.

Niva Bupa's IPO arrives at a time when the health insurance market in India is witnessing exponential growth. As a leading SAHI provider, Niva Bupa is well-positioned to leverage this expanding demand. The company's track record in premium growth, market share gains, and focus on capital adequacy highlights its commitment to sustaining long-term growth and addressing the rising healthcare needs of India's population.