One of the biggest retail health insurers in India, Niva Bupa Health Insurance, is getting ready to make its highly anticipated initial public offering (IPO) on stock exchanges. The initial public offering (IPO), which is scheduled to start on November 7, 2024, with a price range of Rs 70–74 per share, intends to generate up to Rs 2,200 crore, which includes an offer-for-sale (OFS) of Rs 1,400 crore and a fresh issuance of Rs 800 crore. The company, which changed its name from Max Bupa to Niva Bupa and has been gradually increasing its presence in the Indian health insurance industry, has reached a major milestone with this public issue.
Credits: NDTV Profit
IPO Details: Key Dates and Offerings
The IPO will open for general subscription on November 7, with a closure date of November 11. For anchor investors, the book will open a day prior, on November 6. Each lot consists of 200 shares, and further bids will need to be placed in multiples of this. Following the closure, Niva Bupa shares will be listed on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
Six book-running lead managers—ICICI Securities, Morgan Stanley India, Kotak Mahindra Capital, Axis Capital, HDFC Bank, and Motilal Oswal Investment Advisors—are supporting the IPO, ensuring extensive reach and accessibility for investors. According to the company’s management, this issue offers an attractive valuation, especially following a strong demand at the pre-IPO price level.
Reduced Issue Size: Why the Target Dropped from Rs 3,000 Crore to Rs 2,200 Crore
According to its draft red herring prospectus, Niva Bupa had initially targeted an IPO of Rs 3,000 crore. Due in major part to True North, the largest selling stakeholder, deciding to lower its interest in the OFS, the business chose to lower the aim to Rs 2,200 crore. Since purchasing a sizeable portion of the business for Rs 511 crore in 2019, True North, a well-known Indian private equity firm, has held the majority of the shares.
Another major stakeholder, Bupa Singapore Holdings Pte., would sell shares worth Rs 350 crore under the offer-for-sale, while Fettle Tone LLP, which is connected to True North, will sell shares worth Rs 1,050 crore. Krishnan Ramachandran, the MD and CEO of Niva Bupa, stated his conviction that the IPO’s updated price range is a good one.
Fund Utilization: Strengthening Solvency and Expanding Capabilities
The company’s solvency ratio will be strengthened from its present level of 2.3 to about 3 with the help of a significant amount of the IPO proceeds. A higher solvency ratio will improve Niva Bupa’s financial standing and put the company in a better position for long-term growth in the fiercely competitive health insurance sector, according to Ramachandran. The business also intends to use the funds to develop new technologies and broaden its distribution system.
“We are investing in technology and increasing our distribution capabilities, but the majority of the funds are being used to improve our solvency,” Ramachandran said. This indicates a deliberate effort to improve overall operating efficiency, fortify claim processing, and improve the client experience.
Company Background: From Max Bupa to Niva Bupa
Niva Bupa was first established in 2008 as Max Bupa, a joint venture between Max India Ltd. and the massive UK healthcare company Bupa. However, the brand was rebranded as Niva Bupa Health Insurance after True North purchased the majority of the company in 2019. Since then, the business has advanced significantly, and as of FY 2023, it was the third-largest retail health insurer in India, with gross written premiums of over Rs 4,000 crore.
Presently, Niva Bupa has a vast network of more than 10,000 partner hospitals throughout India and is known for processing claims quickly, as seen by its 91.6% claims settlement record. This strong track record demonstrates the insurer’s focus on the needs of its clients and positions it as a reliable brand among Indian health insurance companies.
Why Investors Are Excited About Niva Bupa
In the fiscal year that ended in March 2023, Niva Bupa turned a profit, marking a recent improvement in the company’s financial performance. This, according to Ramachandran, is a result of the large investments made recently. He said, “Our investments over the last four years have put us above the expense management limit at this time.” By enhancing its technology, customer support, and distribution networks, the company will be able to maintain its development trajectory with the help of the money raised from the IPO.
