New India Assurance, the country’s largest general insurance company, on Wednesday filed a draft red herring prospectus (DRHP) for an initial public offering (IPO) with the Securities and Exchange Board of India (Sebi).
New India Assurance, the country’s largest general insurance company, on Wednesday filed a 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 New India Assurance will come down to 85.44%. The offer is being made through the book building process and not more than 50% offer shall be allotted on a proportionate basis to Qualified Institutional Buyers (QIBs). Five of the QIB portion shall be available for mutual funds, and the remaining shall be available for allocation on a proportionate basis to all QIB bidders, including mutual funds.
Further, not less than 15% of the offer shall be available for allocation on a proportionate basis to non-institutional bidders and not less than 35% of the offer shall 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 utilised 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 added.
New India Assurance enjoyed a market share of 15% of gross direct premium in the financial year 2016-17. Its global operation is spread across Asia Pacific, West Asia, Africa and the Caribbean. As of June 2017, New India operates in 28 international jurisdictions through a number of international branches, agency offices, subsidiaries and associated companies.
In the financial year 2016-17, New India had registered profit after tax of Rs 1,008 crore, an increase of 22% 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 segments. The insurer recorded a global premium of Rs 22,279 crore in last fiscal with a growth of 21.27%, the Indian premium was Rs 19,115 crore with a growth of 26% in 2016-17.
In the same financial year, motor insurance and health insurance segments contributed 38.81%, 26.19% respectively. As of June 2017, their distribution network included 68,389 individual agents and 16 corporate agents. In 2016-17, gross direct premium generated from their agent network (individual and corporate agents), brokers, and bancassurance partners contributed 42.01%, 25.75%, and 1.15%, respectively, while direct sales contributed 31.09% of our gross direct premium in India in such period.