The Securities and Exchange Board of India (SEBI) has approved IndiaFirst Life Insurance Company’s plan to launch an initial public offering (IPO). The company is promoted by the Bank of Baroda.
The article highlights the IPO details, including the offer for sale and utilization of funds, along with the company’s financial performance and prospects.
SEBI approves IPO of IndiaFirst Life Insurance
IndiaFirst Life Insurance, one of India’s leading life insurance companies in India, has received approval from SEBI to launch an IPO worth Rs 500 crore and an offer for the sale of 14.12 crore equity shares by selling shareholders, including Bank of Baroda and Carmel Point Investments India. Union Bank of India, a public shareholder, will also sell 1.3 crore shares through the offer for sale.
Presently, Bank of Baroda holds 65% of the shareholding in the company, followed by Carmel Point Investments India with 26%, and Union Bank of India with a 9% stake.
Offer for sale (OFS) is a mechanism for companies and promoters to sell their shares in the stock market. It allows existing shareholders to sell their shares to the public without the company issuing new shares.
Details of the IPO and Offer for Sale
According to the plan, Bank of Baroda and Carmel Point Investments India will sell 8.9 crore and 3.92 crore equity shares, respectively, through an offer-for-sale. From the pre-IPO placement, IndiaFirst anticipates raising Rs 100 crore before filing the red herring prospectus with the Registrar of Companies (ROC).
A red herring prospectus is a preliminary document filed by a company with the Registrar of Companies (ROC) and the Securities and Exchange Board of India (SEBI) before an IPO.
The fresh issue proceeds will mainly be used to strengthen its capital base, supporting solvency levels. However, as per the reports, the issue size could be reduced if the pre-IPO placement is implemented.
The issue is being managed by ICICI Securities, Ambit, HSBC Securities and Capital Markets (India), BNP Paribas, BOB Capital Markets, Jefferies India, and JM Financial as the merchant bankers.
Purpose of IPO
The funds will be used primarily to support the company’s growth and to expand its product portfolio. The IPO is expected to provide the company with the capital it needs to achieve its long-term objectives.
IndiaFirst Life Insurance’s Financial Performance and Prospects
IndiaFirst Life Insurance has been identified as one of the country’s fastest-growing private life insurers for new business IRP in FY22, according to a CRISIL report. Despite posting a loss of Rs 281.62 crore for the fiscal year ended March 2022, the company had previously recorded a profit of Rs 30.19 crore in the preceding year. However, the net premium earned for FY22 stood at Rs 4,985 crore, up 27.8 percent over the previous year. IndiaFirst Life Insurance’s new business premium for FY22 reached Rs 2,766 crore, marking a 35% increase from the previous year. The company also saw a 55% surge in individual new business premiums, with a total of Rs 1,429 crore for the year.
In the past financial year, the company sold 2.65 lakh policies, a significant increase from the 1.97 lakh policies sold in the previous year.
Scope for Indian Investors
IndiaFirst Life Insurance’s IPO offers Indian investors an opportunity to invest in the growing life insurance industry in India. With a strong product portfolio and expansive bancassurance networks through the Bank of Baroda and Union Bank of India, IndiaFirst Life Insurance has emerged as one of India’s fastest-growing private life insurers. Indian investors can apply for the IPO through Shoonya’s online trading platform or Shoonya App, which offers some latest financial tools and the option to modify, or cancel your order and check allotment status in one tap access.
Disclaimer: Investments in the securities market are subject to market risks; read all the related documents carefully before investing.