New India Assurance’s IPO oversubscribed on Day 1

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In a move indicating the belief in the insurance industry, the IPO (Initial Public Offer) of New India Assurance (NIA) saw an oversubscription on the first day itself. While a total of 12 crore shares are being offered under the IPO, 12.31 crore shares received bids, resulting in an oversubscription of 1.03 times on day 1.

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NIA’s IPO was oversubscribed on day 1, with over 12.31 crore bids received.

As 11:45 a.m. today, the shares were subscribed 1.05 times, with bids received for 12.57 crore shares.

India’s largest general insurance company, NIA has set a target of Rs.9,600 crore through this IPO. Each equity share has been set in the price band of Rs.770 and Rs.800.

Of the 12 crore shares, 2.4 crore shares are fresh issue, with government shares accounting for the rest (9.6 crore). While the new (fresh) issue amounts to Rs.1,920 crore, government shares are valued at Rs.7,680 crore.

The IPO currently enables investors to apply for a minimum of 18 shares, with increases permitted in multiples of the same.

LIC has been a major bidder, having bid $1 billion towards the IPO. This resulted in oversubscription of the shares reserved for institutional investors. Institutional bids on day 1 stood at Rs.9,913 crore, resulting in an oversubscription to the tune of 2.13 times the reserved quota for them.

Employee bids stood at Rs.7.3 crore, while retail bids were at Rs.58 crore.

The IPO will result in NIA’s stock dilute by 14.13 per cent. While NIA established its value to be Rs.70,000 crore at the time of filing the draft red herring prospectus, the government priced it at Rs.64,000 crore.

Nationalised in 1974, National India Assurance has assets in excess of Rs.69,000 crore, having issued over 27 million policies during the financial year 2016-17.

Read more: NIA to launch IPO in November.

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