New India Assurance Sets Price Band For Rs 9,600 Crore IPO
The offer is available at a price band Rs 770 to Rs 800.
India’s century-old general insurer, New India Assurance Company Ltd. today set a price band of Rs 770 to Rs 800 per equity share for its Rs 9,600 crore initial public offering which opens on November 1.
The insurer will sell 12 crore shares through the initial share sale, the second largest this year after General Insurance Corp. of India Ltd.’s Rs 11,372 crore offer. The IPO includes a fresh issue of Rs 1,920 crore while the rest will be an offer for sale by the government. The IPO will see the insurer dilute a total stake of 14.13 percent.
New India Assurance 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.
Axis Capital, Yes Securities, Nomura Financial Advisory and Securities (India) Pvt Ltd, IDFC Bank and Kotak Investment Bank are managing the share sale.
India’s largest general insurance company by net worth offers insurance products in key business verticals such as fire insurance, marine insurance, motor insurance, crop insurance and health insurance. The company has a price-to-book value of 1.77 times versus 7.09 times its listed peer ICICI Lombard General Insurance Ltd. reported at the end of the March quarter.
“The reason for such an attractive price being fixed is so that we leave something for the investors because we want our retail shareholders to be part of the fortunes of the company,” said G Srinivasan, chairman and managing director of the company.
IPO Highlights
- Gross written premium saw a compound annual growth rate of 15.18 percent between fiscal 2013 and 2017.
- The company’s combined ratio, which indicates the profitability of its insurance business, stands at 110.66 percent as of June 30, compared to ICICI Lombard’s combined ratio of 102.8 percent in the July-September quarter. A combined ratio above 100 percent indicates an insurer is paying more claims than the premium it gets.
- It has a distribution network of 68,389 individual agents, 16 corporate agents and 25 bancassurance partners. It’s pan India branch network includes 2,452 offices across all the states and union territories.
- The company is a market leader in all segments except crop insurance.
- Operating losses in miscellaneous insurance segment in the past five years have shaved off profits from marine and fire insurance. The operating profit fell 11.25 percent to Rs 942 crore in fiscal 2016.
- Profit after tax stood at Rs 820 crore in fiscal 2017, 12 percent lower than the previous year.
- Solvency margin is at 2.22, higher than the insurance regulator’s solvency requirement of 1.5.