India First Life Insurance gets SEBI nod for IPO

The long awaited IPO of IndiaFirst Life Insurance, one of the smaller players in the life insurance space, has finally got the SEBI approval. Insurance companies have to go through multiple approvals from IRDA and later from SEBI also due to the dual nature of the regulation. The public offer of IndiaFirst Life Insurance comprises of a fresh issue of equity shares of Rs500 crore and an offer for sale (OFS) of 14,12,99,422 (approximately 14.13 equity shares). The promoters and the early investors in the company will be selling out of the company in the OFS; albeit partially. The roster of shareholders of IndiaFirst Life Insurance does read like a who is who of the investment world.

It may be recollected that IndiaFirst Life Insurance had filed the DRHP (draft red herring prospectus) with SEBI in October 2022 and the approval has just come in after the due diligence. Let us first look at the OFS portion. Among the major shareholders of IndiaFirst Life Insurance; Bank of Baroda will be a major participant in the OFS. Out of the total OFS component of 14.13 crore shares; Bank of Baroda will offer 8,90,15,734 shares while another key shareholder Union Bank will offer 1,30,56,415 shares in the OFS. In addition, a unit of Warburg Pincus (Carmel Point Investments) will also offer 3,92,27,273 shares of the company as part of the offer for sale. Needless to say, the offer for sale will not lead to dilution of equity as no fresh funds will come into the company.

The fresh issue portion comprises of Rs. 500 crore and these funds will be used largely to boost the capital adequacy of the insurance service provider and also to use funds for its organic and inorganic growth, if required. But above all, the fresh issue proceeds (net of issue costs) will be used to increase the company's capital base and sustain solvency levels. Ahead of the IPO, IndiaFirst Life Insurance is also planning a preferential allotment of up to Rs100 crore. If the private placement ahead of the IPO is successful, the company would reduce the IPO size by the proportionate amount. In such case, the fresh issue portion would be limited to just Rs400 crore instead of Rs500 crore. But that would depend on the institutional appetite as well as the pricing demanded.

As per details furnished in the DRHP, IndiaFirst Life Insurance derives substantial support from the bancassurance network of two of the largest PSU banks (who are shareholders in IndiaFirst Life Insurance) i.e., Bank of Baroda and Union Bank of India. Incidentally, the success of most of the private insurance players like SBI Life, HDFC Life, ICICI Pru Life and Kotak Life largely rests on the bancassurance model wherein the network of the banks and the its customer base is leveraged to the fullest extent. As of the time of filing, IndiaFirst Life offered a total of 29 retail life insurance products. This comprises of 9 participating products, 16 non-participating products (of which 11 non-participating savings products and six non-participating protection products) and 4 ULIPs, apart from 13 group products.

The book running lead managers (BRLM) to the IPO will include ICICI Securities, Ambit Capital, BNP Paribas, BOB Capital Markets, HSBC Securities and Capital Markets (India), Jefferies India and JM Financial. KFIN Technologies Ltd (formerly known as Karvy Computershare Ltd, have been appointed as the registrar to the offer. The equity shares of IndiaFirst Life Insurance will be listed on BSE and NSE.

Quick look at key financial numbers of IndiaFirst Life Insurance

As per the latest data furnished by IRDAI, IndiaFirst Life insurance is still quite small but catching up fast. The table below captures the first year premiums collected by IndiaFirst Life Insurance for the month of February 2023 and also for FY23 for the 11 months to February 2023.

Data Source: IRDA (key figures in Rs crore)

Let us now move to the total sum assured by IndiaFirst Life. The table below captures the total sum assured across all policies by IndiaFirst Life Insurance for the month of February 2023 and also for FY23 for the 11 months to February 2023.

Data Source: IRDA (key figures in Rs crore)

Let us now turn to the number of policies issued by IndiaFirst Life. The table below captures the total number of policies issued by IndiaFirst Life Insurance for the month of February 2023 and also for FY23 for the 11 months to February 2023.

Data Source: IRDA

Let us finally look at the number of lives covered by IndiaFirst Life Insurance. The table below captures the total number of lives covered by IndiaFirst Life Insurance for the month of February 2023 and also for FY23 for the 11 months to February 2023.

Data Source: IRDA

The dates for the IPO are yet to be announced and the announcement is expected shortly.