Govt looks to raise ₹7,000 cr from stake sale in New India Assurance

MUMBAI: State-owned general insurance company New India Assurance Co Ltd (NIA) on Wednesday filed the draft red herring prospectus (DRHP) for its initial public offering (IPO).

The share sale will see a total stake dilution of 14.56%, according to the DRHP available on the website of one of the investment banks managing the share sale.

NIA has hired Kotak Mahindra Capital Co. Ltd, Axis Capital Ltd, IDFC Bank Ltd, Nomura Financial Advisory and Securities (India) Pvt. Ltd and YES Securities (India) Ltd to manage the public offering. The government will sell 96 million shares in the offering, while the company will issue 24 million new shares to raise primary capital.

The government is likely to raise around ₹7,000 crore from its stake sale, two people aware of the plans said, requesting anonymity. Including the new share sale component, the overall size of the issue is expected to be around to ₹10,000 crore.

NIA plans to use the primary capital raised to augment its capital base to support growth of its business and maintain solvency levels. On July 27, Mint reported that NIA was gearing up to file its draft IPO prospectus, with plans to launch the share sale in October or November.

According to its draft papers, NIA has issued 27.10 million policies across product segments fire insurance; marine insurance, motor insurance, crop insurance, health insurance and other products - as of June 30.