After public sector GIC Re, New India Assurance Company, the largest general insurance company in India, on Wednesday filed the draft red herring prospectus (DRHP) for an initial public offering (IPO) with the Securities and Exchange Board of India (Sebi). The offer comprises a fresh issue of 2.4 crore shares and an offer for sale of 9.6 crore shares.
Following the IPO, the government’s stake in the New India Assurance will come down by around 14.5 per cent.
General Insurance Corporation of India had, earlier this week, filed DRHP with market regulator for their IPO. Post the IPO, the central government’s stake in GIC Re will come down by 14.22 per cent, according to the DRHP. The company proposed IPO is of 12.4 crore shares with a face value Rs 5 each. Of this, 1.7 crore will be fresh shares while 10.7 crore will be offered for sale by the government. In 2017, 15 companies have so far raised Rs 12,584 crore through IPOs.
New India’s offer is being made through the book building process and not more than 50 per cent offer will be allotted on a proportionate basis to Qualified Institutional Buyers (QIBs). Five per cent of the QIB portion will be available for mutual funds, and the remaining portion will be available for allocation on a proportionate basis to all QIB Bidders, including mutual funds.
Further, not less than 15 per cent of the offer will be available for allocation on a proportionate basis to non-institutional bidders and not less than 35 per cent of the offer will be available for allocation to retail investors. The company said it will not receive any proceeds from the offer for sale. “The net proceeds of the fresh issue will be utilized towards meeting our future capital requirements which are expected to arise from the growth and expansion of our business, improving our solvency margin and consequently our solvency ratio,” it said.
New India Assurance has a market share of 15 per cent of gross direct premium in the financial year 2016-17. In the financial year 2016-17, New India had registered a profit after tax of Rs 1,008 crore in 2016-17 an increase of 22 per cent over the previous year, largely due to the growth in the investment income.
However, it continued to see underwriting losses in health, motor, crop insurance and fire insurance segment. The insurer recorded a global premium of Rs 22,279 crore in last fiscal with a growth of 21.27 per cent, the Indian premium was Rs 19,115 crore.
The IPO market has turned buoyant this year. Listing gains and returns by newly listed firms as also the positive sentiment in the broader market are among the reasons attributed to the trend. BSE, HUDCO, CDSL, Avenue Supermarts, Shankara Building Products and S Chand and Company are some of the companies who completed their IPOs in the last seven months.