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Headline : New India Assurance files for IPO, to dilute14.56 per cent of the company's post issue share capital
News Date : Aug 09, 2017
Source : AIP News Bureau
NIA's share has a face value of Rs 5, pricing and size will be decided later


New India Assurance(NIA), the largest non-life insurer in the country filed draft red herring prospectus (DHRP) for public listing before the capital markets regulator Sebi here today.


Earlier the national reinsurer, GIC Re filed DHRP for public listing before the capital markets regulator Sebi  on Monday.



The government will be selling 9.6 cr shares, whereas NIA itself will sell 2.4 cr  through the IPO.Thus a total of 12 crore shares of the reinsurer would be sold through the share sale offer, constituting 14.56 per cent of the company’s post issue share capital, as per the filing of the company.


The issue size of the forthcoming IPO of GIC Re is likely to be over USD 1 billion,’ merchant banking sources said.

The issue is likely to hit the market mid November.

The face value of company's each share is Rs 5 and both the premium and the total issue size will be decided at a later date with the consultation of the government.



``We have filed DHRP for the company’s forthcoming IPO with Sebi today,” said an official of the company.


G Srinivasan, CMD, New India Assurance had earlier said,``We are waiting for clearance from the government as to what will be the total size of the issue. There will be a total   disinvestment of 25 per cent over three years. ”


The net worth of the company , including fair value of investments, is Rs 34,716 crore at the end of March 31, 2017. The market value of investment is Rs 53,009 crore and its asset base is Rs 69,173 crore. 

The authorised share capital of the company stood at Rs 300 crore and the paid-up share capital at Rs 200 crore as on 31 March 2016. The government holds 100% stake in the company.

NIA has reported a net profit at Rs 1,008 crore in 2016-17, up 22% over 2016, driven by investment income which whittled down the high underwriting losses.

The insurer, with 16% market share, had a domestic premium income of Rs 19,115 crore, a growth of 27.17% from Rs15,115 crore a year before.

NIA is the only Indian general insurer that has a large scale international operations. 

Axis Capital, Nomura Financial Advisory and Securities (India) Private Limited , IDFC Bank and Kotak Investment Banking are managing NIA's IPO.


According to NIA’s draft prospectus, the profitability of general insurance companies is dependent on underwriting performance and investment returns. The Indian general insurance industry is facing high underwriting losses. In fiscal 2016, the industry reported cumulative underwriting losses of around Rs  147 billion.



The adverse trend in underwriting continued in fiscal 2017 as well, with the industry posting underwriting losses of Rs  110 billion in the first nine months of the year, added the prospectus.



Despite the underwriting losses, the industry has been profitable at the net level, supported by healthy investment income both in the form of income from interest, dividend, and rents and profit from sale of investments, said the draft prospectus.


The filing of GIC Re and NIA comes amid a surge in IPOs in Asia's third-largest economy, which has spurred a slew of insurers to pursue listings, including SBI Life Insurance Co Ltd, a unit of State Bank of India and ICICI Lombard General Insurance, where Canadian Indian Prem Watsa owned Farifax will be reducing its  stake to 10 from 23 per cent. 




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