Health Insurer Niva Bupa Sets Price Band For Rs 2,200-Crore IPO

Niva Bupa Health Insurance Co. set a price band of Rs 70-74 per share for its initial public offering that will open for subscription later this week.

The health insurer aims to raise up to Rs 2,200 crore in its upcoming maiden issue. 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, said Krishnan Ramachandran, MD and CEO at Niva Bupa. There is great value for investors at the current price band, Ramachandran said, adding that the company saw good demand at the pre-IPO price as well.

Under the offer-for-sale, 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.

The issue opens for subscription on Nov. 7 and will close on Nov. 11. The anchor book issue will be open for subscription on Nov. 6. The minimum lot size for bidding will be 200 shares, with further bids to be made in multiples. Shares will be listed on the BSE and NSE.

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

Proceeds from the issue will be used to augment the company's capital base to strengthen solvency levels and for general corporate purposes. The company's solvency ratio is expected improve to about 3 post the fundraise, from about 2.3 currently, Ramachandran said. While the funds will majorly be used to improve solvency, they will also be invested in technology and distribution, he added.

"We are above the expense management limit because of significant investment mode over the past four years," said Ramachandra, adding that the investments are also the reason the company turned profitable only in fiscal ended March 2023.

Founded in 2008, Bupa was a founding shareholder of the insurance giant. Later, True North became Niva Bupa's majority shareholder in 2019 by acquiring a stake for Rs 511 crore.

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 fiscal 2023.