True North sells 20% stake in Niva Bupa, aims for ₹1,100 cr raise

Mumbai: Homegrown private equity fund True North has sold 20% of its stake for around ₹2700 crore in Niva Bupa, a general insurance company, to its joint venture partner Bupa, an international healthcare company headquartered in the UK.

The exit comes at a time when True North is looking at raising a new fund, the seventh fund with a corpus of more than a billion dollars.

The equity fund company is also looking at raising around ₹1,100 crore in primary capital which will value it at a post-money valuation of ₹12,600 crore. The company is looking at listing on Indian bourses in the next 12-15 months, a senior fund official said.

With this transaction, Bupa, a founding shareholder when the business was first established in India in 2008, will end up holding around 63% stake in the insurer. True North, through its special purpose vehicle True North’s SPV Fettle Tone, will hold around 28% stake post the transaction.

“The transaction involves primary fund infusion of around ₹300 crore by both the JV partners and another ₹800 crore will be raised from external investors,” said Divya Sehgal, partner, True North. “Post the primary infusion and subsequent dilution, the SPV will hold around 28% stake in the company,” Sehgal added.

Mint first reported the company’s plans to raise $100 million in primary capital on March 27.

True North acquired a 55.6% stake in the business in 2019 through its special purpose vehicle (SPV) Fettle Tone from Max India Ltd stake for ₹510 crore in 2019. In March 2021, Axis Bank acquired a 9.9% stake in True North’s SPV Fettle Tone for ₹90.8 crore, according to filings at the time. True North now holds little more than 60% of the SPV, with other investors holding the remaining.

The partial stake sale to Bupa gives True North more than five-fold returns on its investment. The deal becomes second after Generali’s stake hike in Future Generali where the foreign partner has increased its stake in the Indian JV.

Since True North’s investment into the company, the business which was clocking ₹1200 crore in premium collection, has grown to be aiming at upwards of ₹5000 crore in premium collection for FY 24, Sehgal said.

“The business has so far grown at a compounded basis at 40% since we invested and is expected to at 25-30% over the next 18-24 months,” he added.

The company, now ranked third in the Indian market, commands a 8.4% market share, which has doubled from 4% in 2019.

“In becoming a majority shareholder, we are building on the foundation of our strong partnership with True North. We look forward to using our market expertise and global scale to help Niva Bupa continue to grow and serve even more customers with their healthcare needs,” said Iñaki Ereño, Group CEO of Bupa in a release announcing the transaction.

The transaction in subject to IRDAI, the insurance regulator’s approval. The transaction comes after IRDAI permitted foreign entities to own up to 74% of an Indian insurer. Kotak Investment Banking is the exclusive financial advisor to True North and Niva Bupa, while Rothschild & Co is the exclusive advisor to Bupa on the transaction.