Niva Bupa Health Insurance, formerly Max Bupa Health Insurance, is gearing up for a significant financial move – an initial public offering (IPO) aiming to raise Rs 3,000 crore, as confirmed by reliable banking sources.
The company, formed through a partnership between UK-based Bupa and domestic private equity firm True North, has engaged the services of respected investment bankers including Kotak Mahindra Capital, ICICI Securities, and Morgan Stanley to oversee this strategic initiative.
Regulatory Capital
The decision to go public stems from the company’s objective to bolster its equity capital for both growth and regulatory requirements.
With Bupa holding a substantial 63% stake and True North owning 28%, the IPO is poised to include fresh issuances alongside an offer for sale (OFS). This move underscores Niva Bupa’s commitment to navigating the evolving landscape of the health insurance sector.
Market Position
As of FY2023, Niva Bupa stands as the third-largest standalone health insurance (SAHI) and the ninth-largest overall health insurance player in India. In the retail health segment, it claims the third-largest spot overall and secures the second-largest position among SAHIs. A notable contender in the industry, Star Health and Allied Insurance, commands a market value exceeding Rs 32,000 crore.
Strategic Partnerships
Niva Bupa’s journey includes strategic moves like True North’s sale of a 20% stake to UK-based partner Bupa in October last year, amounting to approximately Rs 2,700 crore. True North had initially acquired a 51% stake from Max India in 2019, rebranded as Max Bupa Health Insurance.
The company’s growth trajectory is evident in its market share, witnessing a substantial rise from 2.0% to 4.4% in overall health and from 4.1% to 8.4% in retail health between FY18 and FY23.
Navigating Challenges
Despite facing losses during FY18-22, mainly attributed to heightened claims during the COVID period, Niva Bupa has managed to outpace industry growth. This accelerated growth has necessitated increased capital, reflecting in the equity capital base surging from Rs 930 crore in FY2018 to Rs 1580 crore as of September 30, 2023.
Network and Outreach
With a vast network encompassing over 200 branches, 145,000 individual agents, and 46 corporate agents, Niva Bupa has strategically positioned itself in the market. Additionally, the company boasts tie-ups with a commendable 10,000-plus hospitals, solidifying its presence and accessibility.
Conclusion
As Niva Bupa Health Insurance gears up for its IPO, the strategic move reflects not only a financial milestone but a testament to its resilience and commitment to evolving in the dynamic health insurance landscape.
