Niva Bupa sets a price band of Rs 70-74 for its Rs 2,200 crore IPO

The IPO is a mix of a fresh issue of up to Rs 800 crore and an offer for sale (OFS) of up to Rs 1,400 crore by Bupa Singapore Holdings Pte Ltd and Fettle Tone LLP

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Standalone health insurer Niva Bupa Health Insurance, which is set to go public through a Rs 2,200-crore initial public offering (IPO), has set a price band of Rs 70–74.

 

The IPO will open for subscription on November 7 and close on November 11.

 

The IPO is a mix of fresh issue of up to Rs 800 crore and an offer of sale (OFS) up to Rs 1,400 crore by Bupa Singapore Holdings Pte. Ltd and Fettle Tone LLP.

 

Post the IPO, the stake of Bupa Group will come down to 56 per cent from the existing 59 per cent and that of Fettle Tone will come down to nearly 17.5 per cent from 27 per cent.

 

ICICI Securities, Morgan Stanley India Company, Kotak Mahindra Capital Company, Axis Capital, HDFC Bank and Motilal Oswal Investment Advisors are the book-running lead managers.

 

The proceeds from its fresh issuance will be utilised for strengthening capital base to maintain and strengthen solvency levels and for general corporate purposes.

 

The money will be used for expansion, including strengthening the distribution channel, augmenting the brand and technology and improving quality of talent.

 

“Post the IPO, the solvency will rise above 3 from the existing 2.55. The primary capital raise we believe will put us in good stead into the foreseeable future as far as funding the growth of the company and the solvency requirements are concerned. It is more about a solution that gives a permanency to the company,” said Krishnan Ramachandran, managing director (MD) and chief executive officer (CEO), Niva Bupa Health Insurance said.

 

“The idea is to continue to balance out the channels and invest in each of them for growth because the channel is fundamentally a vehicle for us to acquire more customers. Secondly, the investments will go into a broad-based set of capabilities for the company, which includes brand strengthening. Technology is a big area of investment for us, be it in automation, analytics or decision making. So, that will be a big area of investment for us,” Ramachandran said.

 

Niva Bupa's overall gross written premium (GWP) increased at a compound annual growth rate (CAGR) of 41.27 per cent during FY20-FY24, while its retail health GWP grew at a CAGR of 33.41 per cent. For the three months ended June 30, 2024, the overall GWP grew at 30.84 per cent and its GWP from retail health grew at 31.99 per cent.

 

Ramachandran expects the health insurance industry to grow at a CAGR of 17–18 per cent and the company will grow above the industry.

 

Further, when asked about discussions with LIC regarding a stake sale, he stated that it is not currently in talks with the company.

 

The life insurer has said that it plans to enter the health insurance segment by acquiring a strategic stake in a standalone health insurance company.

“There has been no conversation with us (on stake acquisition by LIC),” Ramachandran added.