Things to know for prospective investors about IPO of Sanima General Insurance Limited; high chance of lottery for 10 units
Tue, Oct 6, 2020 3:35 PM on IPO/FPO News, Company Analysis, Exclusive,
Company Profile:
Sanima General Insurance Limited (SAICL) is a general (non-life) insurance company that started its commercial operation on July 11, 2018. The company is incorporated under the Companies Act and Insurance Act as a public limited company. The company provides a range of general insurance covers for businesses and individuals. The company is promoted by Sanima Group which is promoted by a group of Non-Resident Nepalese (NRN).
The company has a network of 18 branches (including head office), 10 sub-branches supported by 93 employees, and 208 insurance agents as of Mid-January, 2020.
The company's paid-up capital stands at Rs. 70 crores and has a reserve and surplus of Rs. 19.18 lakhs. As per the report, the company earned Rs. 1.85 crores in FY 2076/77.
About the Issue:
Sanima General Insurance Limited (SAICL) is issuing 3,000,000 units of ordinary shares worth Rs. 30 crores to the general public from Ashoj-21, 2077. The early closing date of this IPO issue is on Ashwin 25, 2077. If the issue if not subscribed till Ashwin 25, 2077 then the issue will be extended up to Kartik-06, 2077.
Out of the total issue offered i.e. 3,000,000 units; 4% issue i.e. 120,000 units have been allotted to the employees of the company and 5% of the total issue i.e. 150,000 units have been allotted to the mutual fund. The remaining 21% i.e. 2,730,000 units are for the general public.
Applications can be placed for a minimum of 10 units and a maximum of 1,000 units. NIC Asia Capital Limited has been appointed as the issue manager for the IPO issuance.
After the IPO issue, public holding will be 30% and the promoters holding will be 70%.
Allocation of funds collected from IPO issue:
|
Allocation of funds |
|
|---|---|
|
Particulars |
Amounts |
|
Fixed Deposits |
290,000,000 |
|
Branch Expansion |
10,000,000 |
|
Total |
300,000,000 |
Sanima General Insurance Limited
|
Sanima General Insurance Limited |
|||
|---|---|---|---|
|
|
Percentage |
Units |
Amount |
|
Total Capital |
100% |
10,000,000 |
1,000,000,000 |
|
Total Issue |
30% |
3,000,000 |
300,000,000 |
|
Employees |
1.2% |
120,000 |
12,000,000 |
|
Mutual Fund |
1.5% |
150,000 |
15,000,000 |
|
General Public |
27.3% |
2,730,000 |
273,000,000 |
|
Issue Manager |
NIC Asia Capital Limited |
|
|
|
Issue open date |
Ashwin 21, 2077 |
|
|
|
Issue closing date (earliest) |
Ashwin 25, 2077 |
|
|
|
Issue closing date (latest) |
Kartik 06, 2077 |
|
|
|
Minimum application |
10 |
|
|
|
Maximum application |
1,000 |
|
|
CARE Rating:
CRNL has assigned the ‘CARE-NP BB+ (Is)’ rating to Sanima General Insurance Limited (SAICL). Issuers with this rating are considered to offer a moderate risk of default regarding timely servicing of financial obligations in Nepal.
Capital Structure:
|
Capital Structure |
|
|---|---|
|
Authorized capital |
1,500,000,000 |
|
Issued Capital |
1,000,000,000 |
|
Current paid-up capital |
700,000,000 |
|
Paid-up capital after this IPO |
1,000,000,000 |
Shareholding Structure:
|
Shareholding Structure |
||||
|---|---|---|---|---|
|
|
Number of shares |
Amount |
Percentage |
Remarks |
|
Promoter shareholders |
7,000,000 |
700,000,000 |
70% |
Already Issued |
|
General Public |
3,000,000 |
300,000,000 |
30% |
To be issued |
|
Total |
10,000,000 |
1,000,000,000 |
100% |
- |
Board of Directors:
|
Board of Directors |
||
|---|---|---|
|
S. N |
Name |
Position |
|
1 |
Mr. Khem Raj |
Chairman |
|
2 |
Dr. Hemant Kumar Dawadi |
Director |
|
3 |
Mr. Sonam Myacho |
Director |
|
4 |
Mr. Dilip Shrestha |
Director |
|
5 |
Mr. Damodar Prasad Acharya |
Director |
Management Team:
|
Management Team |
||
|---|---|---|
|
S. N |
Name |
Position |
|
1 |
Mr. Sudyumna Prasad Upadhyaya |
Chief Executive Officer |
|
2 |
Mr. Subodh Lal Shrestha |
Deputy General Manager |
|
3 |
Mr. Prabin Kumar Koirala |
Deputy General Manager-Technical Department |
|
4 |
Mr. Raju Poudel |
Assistant General Manager |
|
5 |
Mr. Anil Raj Giri |
Assistant General Manager-Marketing Department |
Financial Performance:
|
Particulars |
Actual |
Estimated* |
|||||
|---|---|---|---|---|---|---|---|
|
2073/2074 |
2074/2075 |
2075/2076 |
2076/2077* |
2077/2078 |
2078/2079 |
2079/2080 |
|
|
Total Paid-Up capital ('000) |
1,000.00 |
700,000.00 |
700,000.00 |
700,000.00 |
1,000,000.00 |
1,000,000.00 |
1,000,000.00 |
|
Reserve & Surplus ('000) |
-1,858.92 |
8,303.74 |
-6,445.74 |
1,918.50 |
22,336.82 |
57,596.52 |
128,802.92 |
|
Contingent Fund ('000) |
- |
11,389.39 |
29,560.33 |
38,853.93 |
6,145.10 |
10,071.95 |
17,983.66 |
|
Insurance Fund ('000) |
- |
11,544.07 |
29,633.41 |
38,927.01 |
61,614.03 |
100,792.58 |
179,909.69 |
|
Gross Premium ('000) |
- |
255.44 |
196,235.97 |
352,677.14 |
700,000.00 |
1,000,000.00 |
1,250,000.00 |
|
Net Premium ('000) |
- |
112.42 |
74,759.46 |
135,540.67 |
275,292.63 |
395,123.66 |
489,760.89 |
|
Claim Payment (Net) |
- |
110.54 |
82,906.07 |
115,678.68 |
191,020.68 |
259,655.23 |
298,219.83 |
|
Investment Income |
23.70 |
40,865.73 |
71,045.44 |
75,596.76 |
72,977.44 |
87,689.05 |
105,102.66 |
|
Net Profit ('000) |
-1,368.47 |
22,845.66 |
5,956.96 |
18,587.19 |
45,374.05 |
78,357.10 |
148,234.22 |
|
Net Premium/Gross Premium (%) |
- |
44.01% |
38.10% |
38.43% |
39.33% |
39.51% |
39.18% |
|
Earnings per share (Rs.) |
- |
3.26 |
0.85 |
2.66 |
4.54 |
7.84 |
14.82 |
|
Net worth per share (Rs.) |
- |
103.00 |
103.41 |
106.39 |
109.01 |
116.85 |
132.67 |
|
Return on Equity (%) |
- |
3.17% |
0.82% |
2.50% |
4.16% |
6.71% |
11.17% |
Conclusion:
Non-life insurance is one of the most intensely competitive industries with 18 companies including Sanima General Insurance Limited (SAICL). Out of the total insurance company in the market, Sanima General Insurance covers 1.48% (as of Bhadra, 2077) market share in terms of Premium collection. This shows that the company is still in a nascent phase and has yet to go a long way to have a strong market position. The company currently provides its services from 18 branches, so, the company needs to focus on sustaining as well as gradually increasing its presence in the broader market.
When we observe the financial projection of the company, the company will be focusing on expanding the customer base of the company which is crucial for the company’s future. However, this will depend on the management’s ability.
So, what is your view on the whole Non-life insurance industry and Sanima General Insurance Limited in particular? Will you be applying for the issue of will you pass?
How much to apply?
Sanima General Insurance is issuing 3,000,000 units shares where after the allocation of 4% and 5% to staff and mutual fund respectively, 2,730,000 units shares are available to the general public.
If we see the current IPO trend in the market and General Insurance Company Nepal Limited (GICNL) in particular which issued its IPO recently, a total of 8 lakh applicants (approx) applied for the issue oversubscribing by 7.56 times and we assume that the same or even more craze prevails in Sanima General Insurance Limited’s IPO too. Since 10 kitta rule exists for IPO; only 273,000 applicants will be lucky enough to get 10 shares of Sanima General Insurance Limited.
To sum up, if the same number of applicants (or more) who applied for General Insurance’s IPO apply for this issue then there is a high probability of getting 10 units through the lottery. So, it is advisable to apply 10 units in the IPO issue of Sanima General Insurance Limited.
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