New India Assurance IPO’s price band set at Rs770-800 per share

The price band of Rs770-800 for the New India Assurance IPO values the state-owned insurance company at Rs64,392-67,940 crore.

State-owned general insurer New India Assurance Co. Ltd (NIA) will launch its Rs9,600crore initial public offering (IPO) on 1 November. It is the second largest this year after General Insurance Corp. of India Ltd’s Rs11,372crore IPO.

The insurance company has set a price band of Rs770-800 per share for the IPO, which values it at Rs64,392-67,940 crore. The offer will close on 3 November.

Incorporated in 1919, NIA offers insurance products in key business verticals such as fire insurance, marine insurance, motor insurance, crop insurance and health insurance. The company’s gross written premium increased at a compound annual growth rate of 15.18% from Rs13,200.18 crore in fiscal 2013 to Rs23,230.49 crore in fiscal 2017.

In 2016-17, the company reported a revenue of Rs20,471.39crore, up 16% from the previous fiscal. The company reported a profit of Rs839.86 crore in 2016-17, down 9% from a year earlier.

According to G. Srinivasan, chairman and managing director of NIA, the company intends to focus on cost-effective expansion, capitalize on significant market potential and increase market share, and improve underwriting profitability by minimizing errors, developing accurate underwriting models and replacing loss-making schemes and channels with profitable options.

The IPO of NIA will see a total stake dilution of 14.13%.

The IPO includes a fresh issue of Rs1,920crore. NIA plans to use the proceeds from the fresh issue for augmenting its capital base to support growth and expansion of business, improving solvency margin and solvency ratio.

The government, in an offer for sale, plans to sell a total of 96 million shares, which at the upper end of the price band will fetch Rs7,680crore.

NIA has hired Kotak Mahindra Capital Co. Ltd, Axis Capital Ltd, IDFC Bank Ltd, Nomura Financial Advisory and Securities (India) Pvt. Ltd and YES Securities (India) Ltd to manage the public offering.

NIA’s initial share sale is part of the Union government’s divestment plan, under which the department of investment and public asset management (DIPAM) plans to sell government stakes in several central public sector enterprises through various routes such as IPOs, offers for sale and strategic sales.

State-owned firms that have been cleared for IPOs include three defence ministry enterprises—Bharat Dynamics Ltd, Garden Reach Shipbuilders and Engineers Ltd and Mazagon Dock Shipbuilders Ltd—MSTC Ltd, Mishra Dhatu Nigam Ltd, controlled by the steel ministry, North Eastern Electric Power Corp. Ltd, which is under the power ministry, and Hindustan Aeronautics Ltd.

NIA’s IPO also comes after three other insurance IPOs that hit the market earlier this year.

GIC Re’s Rs11,372 crore initial share sale in October was subscribed 1.35 times, while SBI Life Insurance Co. Ltd’s Rs8,400 crore and ICICI Lombard General Insurance Co. Ltd’s Rs5,700 crore IPOs witnessed a subscriptions of 3.57 times and 2.97 times, respectively.

Shares of state-owned GIC Re made a tepid debut on the bourses and closed 4.56% lower at Rs870.40. The company had issued shares at Rs912 per share in its IPO.

NIA’s Rs10,000crore IPO to hit market in first week of November

The Rs10,000crore IPO of New India Assurance will be completed in the first week of November.

New India Assurance (NIA), the largest general insurance company in the country, is set to hit the capital markets with around Rs10,000crore initial public offering (IPO) in the first week of November.

The offer comes soon after the Rs11,370crore IPO of General Insurance Corp. of India Ltd (GIC Re), which will be listed on 25 October. It has already been oversubscribed by over 1.35 times. The street has seen a couple of more IPOs in last one and half months, which include ICICI Lombard and SBI Life.

The IPO of the insurance multinational having operations in 28 countries will be completed in the first week of November, government officials told PTI.

Recently, the company’s top management had completed the overseas road shows and had seen robust response for the issue. Earlier, the company had appointed five merchant bankers — Kotak, Axis Bank, Nomura, IDFC and Yes Bank for the IPO. The company, which is targeting Rs26,000 crore premium in the current fiscal, is the largest general insurer in terms of premium, profits, market share and distribution network.

New India Assurance has assets of over Rs69,000crore and solvency of 2.27 despite growing at compounded annual growth rate of over 15% for last five years. NIA’s networth, including fair value of investments, increased to over Rs38,100crore as of June-end. Its market value of investments stood at Rs63,100crore at the end of June quarter of the current fiscal.

The company, which will be celebrating its ‘centenary year’ in one year, has a rich legacy and sustained its market leadership despite 31 players being there in the industry. In fact, New India’s market share has increased in the last five years and currently hovering around 16%.

India’s top business houses are long-time customers of NIA. New India is the country’s only direct insurer with an international ‘A’ rating and has operations through a desk at Lloyd’s, the world’s largest specialist insurer. Some of the other insurers’ IPOs, which are likely to hit the street in near future include HDFC Life, Reliance General and National Insurance Company.