IndiaFirst Life Insurance files DRHP to raise funds via IPO

Mumbai, Oct 22 Bank of Baroda promoted IndiaFirst Life Insurance is one the fastest growing private life insurers in the country in terms of new business insured retirement plan (IRP) in fiscal 2022 has filed its draft red herring prospectus with the capital markets regulator Securities and Exchange Board of India to raise funds via initial public offering (IPO).

The public issue consists of a fresh issue of equity shares worth up to Rs 500 crore and an offer-for-sale (OFS) up to 141,299,422 equity shares by Promoter and selling shareholders, which comprises of up to 89,015,734 equity shares by Bank of Baroda, up to 39,227,273 equity shares by Carmel Point Investments India Private Limited and up to 13,056,415 equity shares by Union Bank of India ("Selling Shareholders").

The Offer is being made through the Book Building Process, wherein not less than 75% of the Offer shall be available for allocation to Qualified Institutional Buyers, not more than 15% of the Offer shall be available for allocation to Non-Institutional Bidders and not more than 10% of the Offer shall be available for allocation to Retail Individual Bidders.

The company in consultation with merchant bankers to the issue may consider a private placement, preferential allotment, rights issue such other method aggregating up to Rs. 100 crore. If such placement is completed, the fresh issue size will be reduced.

The proceeds from the fresh issuance worth Rs 500 crores will be used towards augmentation of its capital base to support solvency levels.

The Mumbai Headquartered insurance company recorded its highest five-year growth in terms of New Business Individual Rated Premium (IRP) amongst life insurers with PSU bank percentage, with a CAGR of 27.3% between fiscal 2017 to fiscal 2022.

BOB, India's third largest PSU bank hold 65% stake in the company followed by Warburg Pincus affiliate Carmel Point Investments India Pvt Ltd that holds 26% and Union Bank of India that holds 9% stake In FY22 it reported a healthy value of new business (VNB) margin of 23.10%. Over a 3 year period, it also had the highest YOY rise in Individual Sum Assured at 55.8%. It has increased its distribution via emerging channels too – its New Business IRP grew at a CAGR of 27.51% from Rs 71.67 crore in fiscal 2020 to Rs 116.52 crore in fiscal 2022.

As of June 30, 2022, it had 1,634 individual agents and 21 corporate agents.

Net premiums earned by the insurance company increased by 27.80% to Rs 4,985.21 crore for the financial year 2022 from Rs 3,900.94 crore for the financial year 2021. 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% for the period ended March 31, 2021 to 81.16% for the period ended March 31, 2022, and 82.73% 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.

The company's embedded value increased at a CAGR of 10.94% from Rs 1681.20 cr in FY21 to Rs 1865.01 cr in FY 22. Its AUM increased at a CAGR of 13.40% from Rs 14,722.88 cr as of March 31, 2020 to Rs 18,931.81 cr and was Rs 18,637.64 cr as of June 30, 2022.

The organization is chaired by Sanjiv Chadha, Chairman and Non-Executive Director (nominee of Bank of Baroda). The key management team members include Vishakha R M, Managing Director and Chief Executive Officer and Rushabh Gandhi, Deputy CEO, among others.

IndiaFirst Life is supported by an extensive bancassurance network provided by Bank of Baroda and Union Bank, two of India's biggest public sector banks. As of June 30 it offered 29 retail products, comprising of which 9 participating products, 16 non-participating products (of which 11 non-participating savings products and six non-participating protection products) and 4 ULIPs, it also has 13 group products. On the group products front, it had introduced 17 products (including group term life products, group credit life products and riders). As on June 30 it had 58,610 retail product policies in force and 13,47,856 lives covered by group policies, It helps its customers in savings , career and marriage besides retirement planning and asset drawdown.

India's life insurance industry is the ninth largest in the world and the fourth largest in Asia in terms of life insurance premiums. High GDP growth, rising income, younger population, rapid urbanization, focus on financial inclusion, preference towards financial savings, increasing financial literacy and increasing adoption of insurance through digital channels are key factors for the growth of the Indian life insurance sector. Indian life insurers, especially private players, have been using bancassurance partners' substantial branch presence to fuel expansion. The total premium for life insurers is expected to grow from Rs 6.93 trillion to Rs 13.50 trillion between Fiscal 2022 and Fiscal 2027, at a CAGR of 14% - 15%.

ICICI Securities Limited, Ambit Private Limited, BNP Paribas, BOB Capital Markets Limited, HSBC Securities and Capital Markets (India) Private Limited, Jefferies India Private Limited and 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.