Niva Bupa Health IPO opens on November 7; check price band, lot size, risk factors and other key details

The price band of the public offer has been fixed at ₹70-₹74 apiece for a minimum of 200 equity shares and its multiples thereafter.

Incorporated in 2008, Niva Bupa Health Insurance Company is a joint venture between the Bupa Group and Fettle Tone LLP that provides insurance in the health sector.

The company offers a holistic proposition by providing customers access to a comprehensive health ecosystem and service capabilities through its Niva Bupa Health mobile application and website.

The company's products are broadly categorised into retail products designed for individuals and families.

The IPO is a combination of fresh issuance of equity shares worth ₹800 crore and an offer for sale (OFS) of shares valued at ₹2,200 crore by a promoter and an investor shareholder.

Under the OFS, investor Fettle Tone LLP will sell shares to the tune of Rs 880 crore, and promoter Bupa Singapore Holdings Pte Ltd will offload shares valued at ₹320 crore.

Niva Bupa is majorly controlled by Bupa, an international healthcare company headquartered in the UK. At present, Bupa Singapore Holdings Pte owns a 62.27% stake, while Fettle Tone LLP holds a 27.86% stake in the insurance firm.

The company intends to utilise the net proceeds from the fresh issuance to the extent of ₹625 crore towards boosting its capital base to strengthen solvency levels; besides, a portion will be used for general corporate purposes.

This will be the second standalone health insurer looking to float an IPO, after Star Health & Allied Insurance Company.

Risk factors

• Company's profitability depends on its ability to manage its underwriting risks and appropriately price its products

In its RHP, the company says that its profitability depends on its ability to manage its underwriting risks and appropriately price its products and any failure to accurately estimate medical expenses or the frequency of claims could have a material adverse effect on its business, financial condition, results of operations, cash flows, and prospects.

"We price our products based on various assumptions, including the medical expenses we expect to incur, age, and health conditions, as determined under our underwriting process. Our results of operations depend significantly upon the extent to which actual claims are consistent with these assumptions used in pricing our products," it says. 

• Significant portion of business is generated from the health insurance line of business

"As a significant portion of our business is generated from the health insurance line of business, any adverse changes to the demand for health insurance products and the retail health insurance sector may affect the sale of our health insurance products and, in turn, our business and profitability," it says. 

• Company is subject to extensive supervision and regulatory inspections

The company says, "We are subject to extensive supervision and regulatory inspections (onsite and offsite, thematic or otherwise) by IRDAI, and any regulatory and statutory actions against us or our distributors could cause us reputational harm and have a material adverse effect on our business, financial condition, cash flows, results of operations, and prospects."

• Company is dependent on its intermediate distribution channels

"We are dependent on our intermediated distribution channels, particularly individual agents, corporate agents, and brokers, and if we are unable to develop and grow our network of distributors or attract, retain, and incentivise our distributors, it could have a material adverse effect on our business, financial condition, results of operations, cash flows, and prospects," the RHP adds. 

• Company has incurred losses 

Niva Bupa says it has incurred losses in fiscal 2022 and the three months ended June 30, 2024, and June 30, 2023, and may not be able to maintain its profitability in the future, which could adversely affect its operations and financial condition and the trading price of our equity shares.

Kfin Technologies Limited is the registrar for the IPO. The shares are proposed to be listed on BSE and NSE.

ICICI Securities, Morgan Stanley India Company, Kotak Mahindra Capital Company, Axis Capital, HDFC Bank, and Motilal Oswal Investment Advisors are the book-running lead managers of the Niva Bupa Health Insurance IPO.