Niva Bupa Health Insurance, previously known as Max Bupa Health Insurance, has filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise ₹3,000 crore through an initial public offering (IPO). An IPO refers to the initial public offering, where a company introduces its shares to the public for the first time.
The IPO will be a combination of two parts:
- Fresh Issue: Niva Bupa will issue new shares worth ₹800 crore. This means the company will create new shares and sell them to investors for the first time.
- Offer for Sale (OFS): Existing shareholders will also be selling a part of their stake in the company. In this case, ₹2,200 crore worth of shares will be offered for sale. This includes:
- Up to ₹320 crore by Bupa Singapore Holdings, a major shareholder in Niva Bupa.
- Up to ₹1,880 crore by Fettle Tone LLP, another existing shareholder.
The company may also consider a pre-IPO placement of shares worth up to ₹160 crore. This means they might sell some shares to institutional investors before the public offering. If this happens, the number of new shares issued by the company will be reduced.
The money raised from the fresh issue of shares (around ₹625 crore) will be used for two main purposes:
- Strengthening the capital base: This will improve Niva Bupa’s financial stability and allow them to take on more business.
- General corporate purposes: This could include things like marketing, technology upgrades, or expanding their product offerings.
The money raised by existing shareholders selling their shares (₹2,200 crore) will go to them.
Niva Bupa plans to list its shares on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), which are India’s two major stock exchanges.
After the IPO, the shareholding structure of the company will change. Here’s a general idea:
- A significant portion of the shares will be held by qualified institutional buyers (QIBs), which are large investors like banks and mutual funds.
- A smaller portion will be available for retail investors, which are individual investors like you and me.
- The existing promoters (Bupa Singapore Holdings and others) will still hold some shares in the company.
Companies often choose to go public (IPO) to raise capital for growth. This fresh infusion of cash can help Niva Bupa expand its business, invest in technology, and become more competitive in the Indian health insurance market.
What to remember?
This DRHP filing is the first step in the IPO process. SEBI needs to approve the DRHP before the IPO can take place. There is no confirmed date for the IPO yet. It’s important to do your own research before investing in any IPO.