Niva Bupa Health Insurance IPO: The Niva Bupa Health Insurance Company, a specialist health insurance provider in India, is preparing to offer its Initial Public Offering (IPO) on November 7, 2024. This article presents all you need to know regarding the IPO such as the important dates, financial information, rationale, risks involved and the competitive positioning of the business. For investors in health insurance, the Niva Bupa IPO presents a good opportunity.
Key Timelines Related to Niva Bupa Health Insurance IPO
The subscription to the Niva Bupa Health Insurance IPO will be available from November 7, 2024, to November 11, 2024. Shares allotment is expected to take place on November 12 and refunds are expected to be credited the following day, November 13. The shares will be listed on BSE and NSE on November 14, 2024.
IPO Size and Structure
Through this IPO, Niva Bupa Health Insurance plans to collect a net amount of ₹2,200 crores. The offer consists of a fresh issue of 10.81 crore shares which has an issue size of Rs. 800 crores and an Offer for Sale (OFS) of 18.92 crore shares worth Rs. 1,400 crores. As part of the OFS, the promoters of the company, Fettle Tone LLP and Bupa Singapore Holdings Pte. Ltd among others shall reduce their shareholding.
IPO Price Band and Lot Size
The IPO price band is fixed in the range of ₹70 to ₹74 per share. Shares worth 200 which is approximately 14,800, is the minimum application size for the retail investors. A Small Non-Institutional Investor (sNII), applies for more than 14 lots (2,800 shares), the total amount being ₹2,07,200. On the other hand, large Non-Institutional Investors (NII) may apply for a minimum of 68 lots (13,600) and this will cost ₹10,06,400.
Objectives of the Issue
The most important reason for shouldering the Niva Bupa Health Insurance IPO cost is to raise funds for further strengthening the capital base of the company, thus increasing its solvency levels. A part of the money raised will also be allocated for general corporate purposes so that Niva Bupa is able to enhance its service offerings and customer experiences.
About Niva Bupa Health Insurance Company
Niva Bupa Health Insurance Company Limited was established in 2008 and is a joint venture between Fettle Tone LLP and the Bupa Group. The firm renders health insurance services fully integrated with its website and mobile register in which clients undertake management service, claims, and health check despite telehealth and other clinical related services offered.
Financial Performance
Niva Bupa Health Insurance financial numbers depict tremendous success. For instance, in FY24, the revenues for the company roused by an astonishing 44.05% to reach Rs 4,118.63 crore as opposed to Rs 2,859.24 crore during FY23.
In addition, net profit experienced a massive growth, as it escalated remarkable by 552.73% to Rs 81.85 crore in FY24 from Rs 12.54 crore during FY23. Nevertheless, the company did incur a loss of Rs 18.8 crore in Q1 FY25, which seasonality of the insurance sector is mainly blamed for.
Main Risks and Hazards
There are clear risks in buying shares from Niva Bupa Health Insurance IPO:
- Legal Risks: Niva Bupa operates in a sector which is governed by a multitude of laws and regulations. The activities of Niva Bupa are also under the supervision of the Insurance Regulatory and Development Authority of India (IRDAI). Any negative development in the regulatory framework may harm its business and reputation.
- Risk of loss and Dependent on Key Management: The company’s business strategy relies on the skill and performance of its managers and employees. Failure to retain or recruit critical people will have an adverse effect on its business.
- Customer Acquisition Strategy: Niva Bupa is primarily dependent on the third party distribution strategy through individual agents, brokers, and corporate agents. Any problems with these channels may affect its customer reach and service provision.
- Profitability: The Company had periods of financial loses attributable to seasonality and cost of operations. The company has recorded a growth trend but the profitability going forward is doubtful.
- Litigation Risks: Today, Niva Bupa and some of its directors are facing legal action, which may lead to negative financial and operational consequences if not settled in their favor.
Shareholding of Promoters
Bupa Singapore Holdings Pte. Ltd. and Bupa Investments Overseas Limited are the main promoters of Niva Bupa Health Insurance. After the initial public offer, the promoters will not remain with the same investment and will participate in the Offer For Sale. Bupa Singapore currently has a shareholding of 62.19 percent while Fettle Tone LLP has 26.8 percent.
Market Competition
The health insurance market in India is intensely competitive with a lot of players both in public and private sectors. Niva Bupa is one of the most popular providers of Standalone Health Insurance (SAHI) and has to compete with seven other SAHI, which is recognized by IRDAI agency, and public and private insurers as well.
In fact, new competition is on the rise as digital-first companies and insurance aggregators are venturing into the health insurance space. Such is the strength that Niva Bupa has been able to provide health insurance through Policybazaar.com, where it sells as the second-highest selling health insurance provider on that platform.
Strengths & Advantages
Every insurance provider has its own strengths but the case is different when we talk of Niva Bupa Health Insurance.
- The High Average Ticket Size: Niva Bupa’s agency channel had the highest average ticket size amongst SAHI peers in FY23 indicating its ability to reach out to rich clients.
- Tech-Driven Fraud Detection: The firm utilizes machine learning and logistic regression models to check claims. The sophisticated technology reduces fraudulent claims coming through and also improves customer experience.
- Digital Health Ecosystem: The Niva Bupa Health application is designed to cater to the user’s health needs by availing health services such as consultation, annual check-up, and active monitoring of the health values. The ecosystem aims at creating a one-stop shop for the users in need of health services.
Grey Market Premium (GMP)
As per the latest update, there was no premium attached to Niva Bupa Health Insurance IPO Grey Market Premium (GMP). Thus, Niva Bupa Health Insurance IPO was USD 0, which indicates there was no control over the issue price. GMP is a non-regulated way of measuring people investing in stocks. A niggardly investor subscribes to a stock at issue and potentially is not able to sell on the exchange, they sell out in the grey area instead and does so without a phenomenal mark up.
Shareholdings
Of the shares issued to the public in the Niva Bupa IPO, 75% is earmarked for Qualified Institutional Buyers (QIBs), 15% for Non-Institutional Investors (NIIs) and 10% for Retail Investors. Such provisions are made to enable investor group diversification in the IPO.
Recommendations
The historical performance as well as the expected growth of Niva Bupa health insurance and the entire health insurance industry can lead you to a well-informed decision concerning your readiness to engage in the public offering. Given that the IPO will commence on November 7, 2024, this could present an opportunity to seize the growing prospects in the health insurance sector in India.