Niva Bupa ₹2,200 crore IPO opens on November 7: Here’s all you need to know about this health insurance service provider

Niva Bupa Health Insurance Co. Ltd, India’s leading health insurer, is set to launch its ₹2,200-crore initial public offering (IPO) this week.

The Niva Bupa Health Insurance IPO is a combination of fresh issuance of 10.81 crore shares, aggregating to ₹800 crore, and an offer-for-sale (OFS) of 18.92 crore shares, worth ₹1,400 crore.

The offer will remain open for subscription from Thursday, November 7, to Monday, November 11.

If you are planning to bid for the issue, you should first take a detailed look at the company’s business profile.

Niva Bupa Health Insurance IPO details

The IPO price band has been fixed at ₹70 to ₹74 per share. The minimum application size for retail investors is a single lot size of 200 shares, entailing an investment of ₹14,800. The small Non-Institutional Investors (sNII) can apply for at least 14 lots, or 2,800 shares, aggregating to ₹2,07,200, and for the big NIIs (bNII) the minimum application size is 68 lots of 13,600 shares, amounting to ₹10,06,400.

Out of the net issue size, the company has reserved 75% of shares for Qualified Institutional Buyers (QIBs), 10% for NIIs and the remaining 15% for the retail category.

About Niva Bupa Health Insurance

Niva Bupa Health Insurance Company Limited is one of India’s largest and fastest-growing standalone health insurers (SAHI).

With Bupa Singapore Holdings Pte. Ltd. and Bupa Investments Overseas Ltd as the company’s promoters, Niva Bupa is the only health insurance company in India that is majority controlled by a foreign global healthcare group.

The company offers its customers the ability to access a comprehensive health ecosystem and service capabilities via its ‘Niva Bupa Health’ mobile application and website.

The application provides its customers access to a range of healthcare solutions including diagnostics, digital consultation, annual health check-ups and health education content. Customers can also undertake claims submission, policy servicing and track health parameters through this application.

Niva Bupa Health Insurance IPO: Key financials

Niva Bupa Health Insurance’s revenue increased by 44.05% to ₹4,118.63 crore in FY24 compared to ₹2,859.24 crore in FY23. For the first quarter of the current financial year 2024-25 (Q1FY25), revenue stood at ₹1,124.9 crore.

Its profit after tax (PAT) surged massively in FY24 to ₹81.85 crore compared to ₹12.54 crore in FY23. However, for Q1 FY25, the company posted a loss of ₹18.8 crore.

Niva Bupa Health Insurance IPO: Key competitors

In India, standalone health insurers along with private and public insurers form the competitive landscape of the health insurance industry.

According to a report by research house Redseer, there are seven IRDAI-recognised SAHI companies (including Niva Bupa) in India as of August 31, 2024. Niva Bupa also competes with four public sector insurers, which include government-owned health and non-life insurers, and 21 private sector insurers, which are privately owned entities offering health and non-life insurance services.

In addition, insurance aggregators and other new companies with a focus on digital distribution are entering the health insurance industry, which further intensifies the competitive landscape.

Niva Bupa Health Insurance IPO: Key strengths

• The average ticket size per policy sold through Niva Bupa's agency channel (individual agents) was the highest among SAHI peers at ₹22,895.43 per policy in FY23 and the second highest at ₹25,028.35 per policy in FY24, signifying enhanced ability of its agency channel to capture the mass affluent customer segment. Overall, the average ticket size per policy for Niva Bupa was the third highest among SAHI peers at ₹28,797.45 per policy in FY24, the company mentioned in its RHP.

• Niva Bupa is the highest-selling non-life insurer on India’s largest online insurance broker/online aggregator, Policybazaar.com, in terms of insurance commissions paid by insurers to the insurance brokers and online aggregators.

• The company uses machine learning-based algorithms and logistics regression models to identify fraudulent claims, and this has helped them drive higher success in fraud detection, and reduce investigation referrals, thereby minimising the impact on the customer experience.

Niva Bupa Health Insurance IPO: Risk and threats

• The biggest threat to Niva Bupa’s business is that the company is subject to extensive supervision and regulatory inspections by the Insurance Regulatory and Development Authority of India (IRDAI). Any regulatory or statutory action against the company or any of its distributors may cause reputational harm. It may also have a material adverse effect on its business, financial condition, cash flows, results of operations and prospects.

• Another major threat is overdependence on manpower. The success of Niva Bupa’s business to a large extent depends on the continued service of its senior management and various professionals and specialists, including actuaries, information technology specialists, investment managers and underwriting and claim settlement personnel. The company’s business condition could suffer if it is unable to attract or retain its senior management or other employees in critical roles.

• The company is also dependent on its intermediated distribution channels, particularly individual agents, corporate agents and brokers. If it is unable to develop and grow its network of distributors, it could have a material adverse effect on its business.

• Another major risk area is profitability. The company has incurred losses in fiscal 2022 and during the three months ended June 2024 and June 2023 due to seasonality in its business where it typically experiences slower sequential revenue growth in the first quarter of each financial year. Although the company has recorded a profit for the full fiscal 2024 and fiscal 2023, there is no assurance that it will not incur losses in the future.

• There are also some outstanding legal proceedings involving Niva Bupa and its directors. These proceedings are pending at different levels of adjudication before IRDAI or various courts, tribunals, enquiry officers and appellate tribunals. Such proceedings could divert management time and attention and consume financial resources in their defence. Further, an adverse judgment in some of these proceedings could have an adverse impact on the business.

Niva Bupa Health IPO dates

Niva Bupa Health IPO allotment status is expected to be finalised on November 12. The company will initiate refunds and transfer of shares to the demat accounts on November 13.

The listing date for the mainboard issue has been tentatively scheduled for November 14. Shares of the company will be listed on the NSE and BSE.

Niva Bupa Health Insurance IPO objective

The company proposes to utilise the IPO proceeds to augment the capital base for strengthening solvency levels. A portion of the funds will also be used for general corporate purposes.