New India Assurance files for IPO
Mumbai: State-owned general insurance company New India Assurance Co. Ltd (NIA) on Wednesday filed the prospectus for its initial public offering (IPO).
The share sale will see a total stake dilution of 14.56%, according to the draft red herring prospectus (DRHP) available on the website of one of the investment banks managing the share sale.
A DRHP, or draft share-sale document, provides information about a company, its business and promoters, how it intends to use the proceeds of an IPO, and the potential risks it faces.
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.
The government will sell 96 million shares in the offering, while the company will issue 24 million new shares to raise primary capital.
The government is likely to raise around Rs7,000 crore from the stake sale, two people aware of the plans said, requesting anonymity. Including the new share sale component, the overall size of the issue is expected to be around to Rs10,000 crore.
NIA plans to use the primary capital raised to augment its capital base to support growth of its business and maintain solvency levels.
On 27 July, Mint reported that NIA was gearing up to file its draft IPO prospectus, with plans to launch the share sale in October or November.
According to its draft papers, NIA has issued 27.10 million policies across all its product segments as of 30 June. Its gross written premium expanded at a compounded annual growth rate of 15.18% from Rs13,200 crore in fiscal 2013 to Rs23,230 crore in fiscal 2017.
With the filing of the prospectus, the government has lined up another mega divestment public offering.
On Monday, state-owned reinsurer GIC filed its draft documents to raise over Rs10,000 crore through an IPO.
The two insurance IPOs will be among the largest share sales to hit the primary markets since Coal India Ltd’s record Rs15,200 crore public offering in 2010.
NIA’s initial share sale is part of the Union government’s divestment plan, under which the department of investment and public asset management has appointed bankers to sell government stakes across over a dozen public sector enterprises through various routes such as IPOs, offers for sale and strategic sales.
The list of companies where the government is looking to pare its stake includes railway subsidiaries Rail Vikas Nigam Ltd, Ircon International Ltd, Indian Railway Finance Corp. Ltd, Indian Railway Catering and Tourism Corp. Ltd (IRCTC) and RITES Ltd.
The filing of NIA’s DRHP also comes at a time when the Indian capital market is expected to see a spurt of insurance IPOs.
Last month, SBI Life Insurance Co. Ltd filed the draft red herring prospectus for its IPO. The issue will see State Bank of India and BNP Paribas sell 80 million and 40 million shares, respectively, collectively selling a 12% stake. The SBI Life IPO is expected to raise around Rs6,000-7,000 crore.
Other insurers planning to go public include ICICI Lombard General Insurance Co. Ltd, the non-life insurance joint venture of ICICI Bank Ltd and Fairfax Financial Holdings Ltd, which filed its DRHP last month and Reliance General Insurance Ltd, the non-life insurance arm of Reliance Capital.