New India Assurance files DRHP with Sebi
Mumbai: Country’s largest non-life insurer, New India Assurance (NIA) filed draft red herring prospectus (DRHP) for public listing before the capital markets regulator Sebi in Mumbai on Wednesday.
Prior to it, the national reinsurer, GIC Re had filed DRHP for public listing before the capital markets regulator Sebi on Monday.
The government will be selling 9.6 crore shares, whereas NIA itself will be selling 2.4 crore shares through the IPO. Thus a total of 12 crore shares of the non-life insurer would be sold through the share sale offer, constituting around 14.56% of the company’s post issue share capital, as per the filing of the company.
The issue size of the forthcoming IPO of New India Assurance is likely to be over $1 billion, merchant banking sources said. The issue is likely to hit the market in mid November.
The face value of company’s each share is Rs5 and both the premium and the total issue size will be decided at a later date with the consultation of the government. “We have filed DRHP for the company’s forthcoming IPO with Sebi today,” a senior official of the company told PTI.
“The company’s IPO was likely to hit the market within 2-3 months from now,” he added.
There will be a total disinvestment of 25% over three years. The networth of the company, including fair value of investments, is Rs34,716 crore at the end-March 31.
The market value of investment is Rs53,009 crore and its asset base is Rs69,173 crore. Authorised share capital of the company stood at Rs300 crore and the paid-up share capital at Rs200 crore as on March-end.
The government holds 100% stake in the company. NIA has reported a net profit at Rs1,008 crore in fiscal 2017, up 22% over fiscal 2016, driven by investment income which whittled down the high underwriting losses.
The insurer, with 16% market share, had a domestic premium income of Rs19,115 crore, a growth of 27.17% from Rs15,115 crore a year ago.
NIA is the only Indian general insurer that has a large scale international operations. Axis Capital, Yes Bank, Nomura, IDFC Bank and Kotak are managing NIA’s IPO.
According to NIA’s draft prospectus, the profitability of general insurance companies is dependent on underwriting performance and investment returns. The country’s general insurance industry is faced with huge underwriting losses.
In fiscal 2016, the industry reported cumulative underwriting losses of around Rs14,700 crore. The adverse trend in underwriting continued in fiscal 2017 as well, with the industry posting underwriting losses of Rs11,000 crore in the first nine months of the year, the prospectus said.
Despite the underwriting losses, the industry has been profitable at the net level, supported by healthy investment income both in the form of income from interest, dividend, and rents and profit from sale of investments, the draft prospectus said.