Medi Assist IPO: Here are key risks to know before subscribing to issue
- The insurance-tech company has fixed Medi Assist IPO price band at ₹397 to ₹418 per equity share.
Insurance tech company Medi Assist Healthcare initial public offering (IPO) has opened for subscription today, January 15. The issue will open till Wednesday, January 17.
The insurance-tech company has fixed Medi Assist IPO price band at ₹397 to ₹418 per equity share. The book build issue is proposed for listing on BSE and NSE.
Medi Assist Healthcare IPO is a book built issue of ₹1,171.58 crore. The issue is entirely an offer for sale (OFS) of 2.8 crore shares by the existing shareholders and there is no fresh issue component.
Around 50 per cent the entire offer has been reserved for qualified institutional buyers (QIBs). Further, 15 per cent shares of the IPO are reserved for non-institutional investors (NIIs) (or high net-worth individuals), and the remaining 35 per cent for retail investors.
Axis Bank Limited, IIFL Securities Ltd, Nuvama Wealth Management Limited and SBI Capital Markets Limited are the book running lead managers of the Medi Assist Healthcare IPO, while Link Intime India Private Ltd is the registrar for the issue.
The allotment for the Medi Assist Healthcare IPO is expected to be finalized on Thursday, January 18, 2024. Medi Assist Healthcare IPO will list on BSE, NSE with tentative listing date fixed as Monday, January 22, 2024.
Here are key risk factors to consider before subscribing to the issue -
- Its business is significantly dependent on group accounts in certain industries, and for the Financial Years 2021, 2022, 2023, and the six months ended September 30, 2023, of the total premiums serviced attributable to its 50 largest group accounts, group accounts in the IT/ITES sector contributed 50.02%, 45.48%, 45.68% and 46.11% respectively, and group accounts in the BFSI sector contributed 21.37%, 21.01%, 20.57% and 22.53%respectively. Any adverse developments affecting such industries may adversely affect our business and results of operations.
- The company is dependent on its Directors, Key Managerial Personnel and Senior Management, and the loss of, or its inability to attract or retain its employees and Directors, Key Managerial Personnel and Senior Management could adversely affect the business, results of operations and financial condition.
- The company derive a significant portion of our revenue from contracts with customers from our Subsidiaries. Our Subsidiaries, Medi Assist TPA and Medvantage TPA contributed to 96.32% of our revenue from contracts with customers in the Financial Year 2023.
- The income from benefit administration services provided to insurance companies across the group and retail portfolio is largely generated as a percentage of its premium under management and any decline in the premium under management may adversely affect the future revenues and profitability.
- There are certain legal and regulatory proceedings against promoters, Dr. Vikram Jit Singh Chhatwal, Bessemer India Capital Holdings II Ltd and Medimatter Health under the provisions of the Companies Act 2013, and which are currently outstanding before the National Company Law Tribunal.
- The subsidiaries, Medi Assist TPA, Raksha TPA and Medvantage TPA, have received show cause notices from IRDAI in the past. Any non-compliance with the Insurance Regulatory and Development Authority of India’s (IRDAI) inspections which take place periodically or any adverse observations by the IRDAI may adversely affect business, results of operation or financial condition.
- The company has failed to make timely regulatory filings with the RoC in the past.
- As of September 30, 2023, subsidiaries, Medi Assist TPA, Medvantage TPA and Raksha TPA have availed bank guarantees amounting to ₹337.30 million, and are required to comply with certain restrictive covenants under their financing agreements. Any non-compliance will lead to an event of default resulting in repayment of the facility on demand, suspension of further disbursements or cancellation of the facility, which may adversely affect the business, results of operations, financial condition and cash flows of Medi Assist TPA and Medvantage TPA and impact their dividends and distributions to the company.
- There are outstanding legal proceedings involving company, directors, promoters and subsidiaries.
- A decrease in insurance companies outsourcing claims processing and other related activities to third party administrators could impact the business, results of operations and financial condition.
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