Niva Bupa Health Insurance Company on Thursday made its market debut, listing at ₹78.1 on the National Stock Exchange (NSE), a 6% premium over its issue price of ₹74. However, the stock closed 5.23% down at ₹74.01.
The ₹2,200-crore IPO comprised a fresh issue of shares worth ₹800 crore and an offer-for-sale (OFS) of up to ₹1,400 crore by promoters and selling shareholders.
Under OFS, promoter Bupa Singapore Holdings diluted stake worth ₹350 crore while investor True North offloaded stakes worth ₹1,050 crore. At the upper price band of ₹74, the IPO delivered two times and five times returns to Bupa Singapore and True North, respectively, compared to their weighted acquisition costs of ₹34.88 and ₹15.57 per share.
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Prior to the IPO, Bupa Singapore held 62.19% while True North (through its special purpose vehicle Fettle Tone LLP) held 26.80% stake in Niva Bupa. Their stake will come down approximately to 56% and 18%.
The company earlier said the fundraise will improve its solvency margin, which will go above 3%, from 2.3% at present, after the IPO. The company will also use the proceeds for investment in technology and general corporate purposes.
Niva Bupa’s IPO opened for subscription between November 7 and 11 at a price band of ₹70-74 per share.
Several brokerages recommended subscribing to the IPO of Niva Bupa, India’s third-largest standalone health insurer by premium collections. Anand Rathi advised investors to subscribe with a long-term outlook, noting: “At the upper price band, the company’s valuation stands at a P/BV of 6.1x, translating to a market capitalisation of ₹13,520 crore post-issue. We believe the issue is fully priced and assign a ‘subscribe – long term’ rating.”
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Geojit Financial also issued a ‘long-term subscribe’ rating, reasoning that at the upper price band of ₹74, the stock will trade at a post-issue adjusted P/B ratio of 4.8x for Q1FY25, which it views as reasonable compared to the listed peers.
The company became the second standalone health insurer to list, following Star Health & Allied Insurance Company’s debut in December 2021.
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