Niva Bupa Health Insurance IPO: Price Band, Financials, Risks — All You Need To Know

Know all about the use of proceeds, business details and more regarding Niva Bupa's initial public offering, which opens on Thursday.

Niva Bupa Health Insurance's initial public offering (IPO), set to open on Thursday, features a price band of Rs 70-74 per share, with a reduced issue size of Rs 2,200 crore. (Photo source: Freepik)

Niva Bupa Health Insurance Co. has set a price band of Rs 70–74 per share for its Rs 2,200-crore initial public offering that will open for subscription on Thursday.

The IPO will consist of a fresh issue of shares worth Rs 800 crore, and an offer for sale of up to Rs 1,400 crore, according to the red herring prospectus filed with the Securities and Exchange Board of India.

The issue size set for the IPO is lower than the Rs 3,000-crore it filed in its draft red herring prospectus. The IPO size was trimmed when the largest selling shareholder—True North—decided to eventually downsize how much they were selling, according to Chief Executive Officer Krishnan Ramachandran.

There is great value for investors at the current price band, Ramachandran said, adding that the health insurer saw good demand at the pre-IPO price as well.

Under the OFS, promoter Bupa Singapore Holdings Pte. will offload shares worth Rs 350 crore, while Fettle Tone LLP will sell stake to the tune of Rs 1,050 crore.

Niva Bupa IPO Key Details

  • Issue opening date: Nov. 7

  • Issue closing date: Nov. 11

  • Issue price: Rs 70–74 per share

  • Fresh issue size: Rs 800 crore

  • OFS size: Rs 1,400 crore

  • Total issue size: Rs 2,200 crore

  • Market value at the upper end of price band: Rs 13,520 crore

  • Lot size: 200 shares

  • Allotment: About 75% of the issue size has been reserved for qualified institutional buyers, 15% for non-institutional buyers and the remaining 10% for retail investors.

Also Read: Niva Bupa IPO: Fresh Issue Will Help Solvency, Growth; OFS To Accommodate FIIs

Niva Bupa IPO: Use Of Proceeds

Proceeds from the issue will be used to augment the company's capital base to strengthen solvency levels and for general corporate purposes.

Also Read: Niva Bupa Health Insurance IPO: Here's What GMP Indicates Ahead Of Launch

Niva Bupa Business Details

Niva Bupa Health Insurance, formerly known as Max Bupa Health Insurance Co., is a joint venture between Fettle Tone LLP—a special purpose vehicle of True North Fund VI LLP—and UK-based healthcare services expert Bupa.

The health insurance company has a network of over 10,000 hospitals and has settled about 91.6% of claims, according to its website. Niva Bupa became India's third-largest retail health insurer, clocking in more than Rs 4,000 crore in gross written premiums in financial year 2023.

The company sells products directly to customers through its direct sales channel, which accounted for 13.07% of business by gross written premium in the last fiscal and comprises sales made by the sales team and online sales through website and Niva Bupa Health mobile application.

Niva Bupa Financial Performance

Niva Bupa's total income in the quarter ended June 2024 stood at Rs 1,125 crore, higher than Rs 806 crore in the same period last year. In the fiscal ended March 31, 2024, it reported a revenue of Rs 2,049 crore, which was more than double from Rs 831 crore in the year-ago period.

The company's profit rose from Rs 12 crore in fiscal 2023 to Rs 82 crore in fiscal 2023–24. However, it posted a loss of Rs 19 crore in the June quarter.

Niva Bupa IPO: Key Risks

  • Underwriting & Pricing Risks: Profitability depends on accurate risk management and pricing, with failure potentially affecting financial performance.

  • Health Insurance Demand: Changes in demand for health insurance can impact product sales and profitability.

  • Product Alignment: Failure to align products with customer needs or successful product development can harm business.

  • Regulatory Supervision: Extensive regulatory oversight by the Insurance Regulatory and Development Authority of India can lead to reputational damage and adverse impacts if any actions are taken against the company.

  • Management Dependency: Losing key senior management or failing to obtain necessary approvals from Irdai could negatively affect operations and financial performance.

  • Distribution Channels: Reliance on intermediated channels (agents, brokers) means that failure to expand or retain distributors could hurt business.

  • Financial Losses: Losses in fiscal 2022 and first quarter of fiscal 2023 and fiscal 2024 may continue, impacting future profitability and share price.

  • Claims Management: Inaccurate or delayed claims payments can cause customer dissatisfaction, regulatory penalties and financial harm.

  • Reinsurance Risks: Difficulty in obtaining timely, affordable reinsurance or exposure to credit risk can affect financial stability.

  • Promoter Ventures: Potential conflicts of interest if directors and promoters engage in similar business ventures.

Watch The IPO Adda Here

Disclaimer: Investments in initial public offerings are subject to market risks. Please consult with financial advisers and read red herring prospectus thoroughly before placing bids.

Also Read: Niva Bupa Health Insurance IPO - Should You Apply? Read Anand Rathi's Analysis

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WRITTEN BY
Shubhayan Bhattacharya
Shubhayan covers markets and business news at NDTV Profit. He has a keen in... more
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