New India Assurance IPO subscribed by 1.07 times

The initial public offering (IPO) of New India Assurance (NIA) was subscribed by 1.07 times on Thursday, the second day of issue, with investors bidding for 12.87 crore shares against 12 crore shares on offer. The qualified institutional buyers (QIB) bid for 12.57 crore shares against 5.82 crore shares on offer. High net worth individuals ( HNI) bid for 6.17 lakh shares against 1.74 crore shares on offer. Retail investors bid for 20.87 lakh shares against 4.07 crore shares on offer. Employees bid for 2.93 lakh shares against 36 lakh shares on offer. The New India Assurance, India’s largest general insurance company has set a price band of Rs 770-800 for its initial public offering (IPO). When calculated at the upper band the company could raise up to Rs 9,600 crore. The issue will close on November 3. The offer comprises of a fresh issue of 2.4 crore shares and offer for sale of up to 9.6 crore shares by the government. Retail investors and employees of the company will receive a discount of Rs 30.

Last month, two insurance companies, SBI Life and ICICI Lombard had raised Rs 8,400 crore and Rs 5,700 crore respectively through their IPOs. General Insurance Corporation raised Rs 11,372 crore in the second week of October. The IPO is a part of the government’s disinvestment programme. According to its red herring prospectus (RHP) as of March 31, 2017, the company had issued 27.10 million policies across all their product segments. The company’s products can be broadly classified into fire insurance; marine insurance, motor insurance, crop insurance, health insurance and other insurance products.

In FY17, the company’s gross written premium was Rs 23,230 crore against Rs 19,227 crore in the previous year. Their gross written premium increased at a compounded annual growth rate (CAGR) of 15.18% from FY 13 to 17. The company posted a net profit of Rs 839.8 crore in FY 17. In 2017, 28 companies raised Rs 44,342 crore through IPO.Listing gains and returns by newly listed companies as also the positive sentiment in the broader market are among the reasons attributed to the trend. SBI Life, ICICI Lombard, GIC Re, BSE, HUDCO, CDSL, Avenue Supermarts, Shankara Building Products, S Chand and Company, and Cochin Shipyard are some of the companies who completed their IPO in the last ten months.