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Bank of Baroda (BoB) promoted IndiaFirst Life Insurance (IFLI) has filed its preliminary paper (draft red herring prospectus) with the market regulator SEBI for an initial public offering (IPO).
According to industry sources, the total mop up eyed through the proposed offering is likely to be in the range of ₹2000-2500 crore.
The proposed IPO consists of a fresh issue of equity shares of up to ₹500 crore and an offer-for-sale (OFS) up to 141,299,422 equity shares by promoter and shareholders, which comprises of up to 89,015,734 equity shares by Bank of Baroda; 39,227,273 equity shares by Carmel Point Investments India Private Limited and 13,056,415 equity shares by Union Bank of India.
BoB, which is India’s third largest public sector bank, holds 65 percent stake in the company followed by Warburg Pincus affiliate Carmel Point Investments India Pvt Ltd (26 per cent) and Union Bank of India (9 percent).
The proceeds from the fresh issuance worth ₹500 crore will be used towards augmentation of its capital base to support solvency levels.
It may be recalled that IFLI recorded highest five-year growth in terms of New Business Individual Rated Premium (IRP) amongst life insurers backed by PSU banks between FY17 and FY22 with a CAGR of 27.3 per cent.
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The bank’s net NPAs came down to 3.60 per cent from 5.55 per centIn FY22, it reported a value of new business (VNB) margin of 23.10 per cent. Over a 3-year period, it also had the highest year-on-year rise in Individual Sum Assured at 55.8 per cent.
It has also increased distribution via emerging channels—New Business IRP grew at a CAGR of 27.51 per cent from ₹71.67 crore in FY20 to ₹116.52 crore in FY22. As of June 30, 2022, it had 1,634 individual agents and 21 corporate agents.
Net premiums earned by the life insurer increased by 27.80 percent to ₹4,985.21 crore for FY22 from ₹3,900.94 crore for FY21.
This increase was primarily the result of higher first-year premiums, renewal premiums, and single premiums, with a slight offset from higher reinsurance ceded.
Its 13th month persistency increased from 78.49 percent for the period ended March 31, 2021 to 81.16 percent for the period ended March 31, 2022, and 82.73 percent for the period ended June 30, 2022 as a result of its continued focus on the quality of new business, needs-based selling, customer service, instant service recovery as part of its customer experience process, brand equity, and streamlining the renewal premium payment process.
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Friday’s low-pressure area intensifies twice over to become depression on SaturdayThe company’s embedded value increased at a CAGR of 10.94 per cent from ₹1681.20 crore in FY21 to ₹1865.01 crore in FY 22. Its AUM increased at a CAGR of 13.40 percent from ₹14,722.88 crore as of March 31, 2020 to ₹ 18,931.81 crore and was ₹18,637.64 crore as of June 30, 2022.
ICICI Securities Limited, Ambit Private Limited, BNP Paribas, BOB Capital Markets Limited, HSBC Securities and Capital Markets (India) Private Limited, Jefferies India Private Limitedand JM Financial Limited are the book running lead managers and KFin Technologies Limited is the registrar to the offer.
The equity shares are proposed to be listed on BSE and NSE.
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