Union Life Insurance issues IPO to general Public

Union Life Insurance IPO

Nepali Investors are provided with another investing opportunity. This time a Life insurance company is issuing an IPO to general Public. Union Life Insurance Company Limited is issuing 58,05,000 units of shares to General Public.

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Company Information:

Union Life Insurance Company Limited (ULICL) is a public limited life insurance company (LIC), operating since July 2017. Union Life Insurance Company Ltd. has been established and registered under Company Act 2063 and Insurance Act 2049 as a Public Limited Company (Regd. No. 168131/73/074) and got a license to operate Life Insurance Business on 2074/02/08(22nd. May 2017).

Its head office is in New Baneswor, Kathmandu. The company has an equity investment of multiple business houses in Nepal such as Jagadamba group, Golchha Organization, Gadiya group, Neupane group, Rajesh Hardware group & Tibrewala Group.

As of mid-July 2020, the major shareholders of ULICL include, Mr. Shekhar Golcha (~19.9%), Mr. Sahil Agrawal (~19.9%) Mr. Sulav Agrawal (~18%), Mr. Sandip Kumar Agrawal (~6.6%), Mr. Rahul Kumar Agrawal (~6.6%), and Mr. Sharad Kumar Tibrewala (~6.6%) among others.


PRESENT BOARD OF DIRECTOR'S COMPOSITION 

(i)   Mr. Sulav Agrawal                             -  Chairman

(ii) Mr.Sandeep Kumar Agrawal              -  Director

(iii) Mr.Jeewan Kumar Agrawal              -  Director

(iv) Mr. Debi Prasad Sharma                - Independent Expert Director


About the Issue:

Union Life Insurance Company Limited issuing 6,450,000 units of ordinary shares worth Rs. 64.5 crores to the general public from Ashad-24, 2078. The early closing date of this IPO issue is on Ashad-28, 2077 and if the issue is not subscribed till Ashad-28 then this issue can be extended up to Shrawan-7, 2078.

Out of offered 6,450,000 units; 5% of the issued capital i.e., 322,500 units have been allotted for the employees of the company and 5% of the total capital has been allotted for the mutual funds. The remaining 5,805,000 units are for the general public.

Applications can be placed for a minimum of 10 units and a maximum of 32,250 units.

Prabhu Capital Limited has been appointed as the issue manager for the IPO issuance.

The paid-up capital will reach Rs. 2.15 Arba after the issuance of the public shares. After the IPO issue; public holding will be 30% and promoters holding will be 70%.


Credit Rating:

ICRA Nepal has assigned the issuer rating of [ICRANP-IR] BBB(pronounced ICRA NP Issuer Rating triple B) to UnionLife Insurance Company Limited (ULICL). Issuers with this rating are considered to have a moderate degree of safety regarding timely servicing of financial obligations.

Grading Strengths:

  • Adequate branch and agency network, experienced management and ownership
  • Product mix dominated by endowment products; good policy continuation rate
  • Adequate reinsurance arrangement
  • Progressive profitability supported by investment earnings

Grading Challenges:

  • Limited track record and therefore untested underwriting controls
  • Suboptimal solvency margin
  • impact of an ongoing covid-19 pandemic on the life insurance industry

(SOURCE: ICRA Nepal)

How much to apply for the IPO of Union Life Insurance ?

The total shares floated by Union Life Insurance Company Limited is 64,50,000 units, of which only 58,05,000 units are available to the general public that can be applied after the allocation of shares to staff of the company and mutual funds.

If we see the recently concluded IPO of previous issued IPO's, a total of more than 20 lakh applicants applied for the company IPO and we assume that the same or even more craze prevails in Union Life Insurance's IPO too. Since the 10 kitta rule exists for IPO; 5,80,500 applicants will be lucky enough to get the shares of Union Life Insurance Company Limited.

Hence, if the same number of applicants (or more) who applied for the previous IPO apply for this issue then there is a high probability of lottery for 10 units. Since the minimum unit is 10, it is advisable to apply only 10 units in the IPO issue of Union Life Insurance Company Limited.

Also Read:

Why You should never miss any IPOs issued in Nepal?


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