India’s Largest General Insurer Files For IPO, May Raise Up To Rs 10,000 Crore
(Source: Wikimedia Commons)

India’s Largest General Insurer Files For IPO, May Raise Up To Rs 10,000 Crore

  • New India Assurance Company will raise over Rs 10,000 crore by selling 15 percent stake via IPO, two bankers told BloombergQuint.
  • The insurer will issue 2.4 crore new shares, translating into 3 percent of the post-issue share capital.
  • The government will sell 9.6 crore shares, or 12 percent stake, through an offer for sale.

New India Assurance Company Ltd. has filed its draft red herring prospectus with the market regulator for an initial public offering as the government looks to sell stakes in state-run general insurers.

India’s largest general insurer is seeking a valuation of around Rs 70,000 crore and will raise up to Rs 10,000 crore by selling 15 percent stake, two bankers in the know of details told BloombergQuint requesting anonymity.

Incorporated in 1919, New India is the second public sector insurer after General Insurance Corporation to file for an IPO. The Narendra Modi administration had in February unveiled a plan to offload stakes in five public sector insurers. The government hopes to raise Rs 11,000 crore from the share sales as part of its effort to raise Rs 72,500 crore from divestment in the year ending March 2018.

Axis Capital, Kotak Investment Banking, IDFC Bank, Nomura Financial Advisory and Securities (India) and YES Securities (India) are the book runners for the New India offer.

The non-life insurer will issue 2.4 crore new shares, translating into 3 percent of the post-issue share capital. The government will sell 9.6 crore shares, or 12 percent stake, through an offer for sale, said G Srinivasan, chairman and managing director at New India. The proceeds from the fresh issue will be used for expansion, he said

The price band and the bid lot size will be decided by the book managers after getting approval from the Securities and Exchange Board of India.

Financial Highlights

According to the prospectus…

  • New India’s solvency ratio as of March 31 stood at 2.22 as compared to the insurance regulator’s minimum requirement of 1.50.
  • The insurer’s total net worth, including fair value of investments, stood at Rs 34,716 crore as of March – increasing nearly 17 percent over the previous year.
  • Its assets grew nearly 10 percent to Rs 70,049 crore during the period.
  • More than half of the insurer’s total investments are held in equities.
  • The yield on its investments rose 7 basis points over the past year to 8.08%.
  • New India’s operating expense ratio of 20.4 percent is the lowest among the top 10 multi-product insurers in India.
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