Niva Bupa Gets SEBI’s Approval for ₹3,000 Crore IPO

Niva Bupa Health Insurance Company, backed by global private equity firm True North, has received approval from the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO) to raise ₹3,000 crore. The regulatory green light was given on October 18, as part of SEBI's latest updates, which included observation letters for Niva Bupa Health Insurance and Paras Healthcare.

Niva Bupa Health Insurance had filed its draft red herring prospectus (DRHP) with SEBI on June 29, 2023, while Paras Healthcare filed on July 31, 2023. The issuance of the observation letter signifies SEBI's clearance, enabling the companies to proceed with their IPO plans.

The proposed ₹3,000 crore IPO for Niva Bupa includes a fresh equity issuance worth ₹800 crore and an offer-for-sale (OFS) component amounting to ₹2,200 crore. In the OFS, promoter Bupa Singapore Holdings Pte will sell shares worth ₹320 crore, and investor Fettle Tone LLP will offload shares valued at ₹1,880 crore.

Niva Bupa Health Insurance is a joint venture between the UK-based Bupa Group, a leading healthcare services provider, and Fettle Tone LLP. According to the DRHP, Bupa Singapore Holdings Pte holds a 62.27% stake in Niva Bupa, while Fettle Tone LLP holds 27.86%, with the remaining shares distributed among public shareholders.

The funds raised from the fresh issue will primarily be used to enhance the company's capital base, thereby strengthening its solvency levels, with the remainder allocated for general corporate purposes.

Should Niva Bupa successfully list, it will become the fourth health insurance company available for trading on Indian stock exchanges, joining the ranks of Star Health and Allied Insurance Company, ICICI Lombard General Insurance Company, and The New India Assurance Company.

ICICI Securities, Morgan Stanley India Company, Kotak Mahindra Capital Company, Axis Capital, HDFC Bank, and Motilal Oswal Investment Advisors are appointed as the book-running lead managers for this IPO.

Meanwhile, Paras Healthcare, backed by private equity firm Creador, has also received SEBI's nod for its IPO, comprising a fresh issue of ₹400 crore and an OFS of 1.49 crore equity shares. Promoter Dharminder Kumar Nagar and investor Commelina will sell 29.28 lakh shares and 1.2 crore shares respectively in the OFS. Commelina, an affiliate of Creador, acquired its stake in July 2017.

Dharminder Kumar Nagar and Commelina currently own 75.32% and 24.68% stakes respectively in Paras Healthcare, which operates eight hospitals under the Paras Health brand, with 2,135 beds across five states and one union territory. The company plans to use ₹300 crore from the fresh issue proceeds to repay debt, with the remainder allocated for general corporate purposes.

The merchant bankers for Paras Healthcare's IPO are ICICI Securities, IIFL Securities, and Motilal Oswal Investment Advisors.

With SEBI's approval, both Niva Bupa Health Insurance and Paras Healthcare are set to enter the capital markets, contributing to the robust IPO activity seen in India this year.

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