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

IPO-bound Niva Bupa Health Insurance Co. will use the proceeds from its fresh issue of Rs 800 crore to support its growth plans over the years and to meet solvency requirements, according to the company's management.

The health insurer has filed its preliminary papers with the market regulator to raise Rs 2,200 crore through the initial public offering. This comprises a fresh issue of 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.

Post the issue, solvency will go up, said Managing Director and Chief Executive Officer Krishnan Ramachandran. To some extent, the company will be over capitalised, but the idea is to take care of future growth requirements, he told NDTV Profit.

"As we execute well, we will continue to be able to grow and also become self sustaining as a company," Ramachandran added.

Under the OFS, promoter Bupa Singapore Holdings Pte. will offload shares worth Rs 320 crore, while Fettle Tone LLP will sell stake to the tune of Rs 1,880 crore.

Chief Financial Officer Vishwanath Mahendra said Bupa Singapore Holding is a long term shareholder, but it is paring stake to accommodate FII headroom. Fettle Tone, the other selling stakeholder, has completed its five years of investment, Mahendra added.

Ramachandran, during the conversation, pointed out that as of August, the company's growth rate is "about 30%" and it continues to grow "over the market growth rate". There has been significant improvement in overall operating metrics, he added.

For the IPO, the company has set a price band of Rs 70-74 per share. The window for subscription will open later this week.