About Union Life Insurance IPO .
Union Life Insurance has opened IPO sale from Thursday (July 8).
The company has sold 6.45 million shares at the rate of Rs 100 per share.Of this, 5% (322,500 lots) has been allocated for employees and 5% (322,500 lots) for mutual funds.The general public will be able to apply for the remaining 5.8 million lots.Applications can be made for a minimum of 10 lots and a maximum of 32,250 lots in the IPO.
Applications for this IPO can be submitted till July 11. The company has stated that the application will be open till July 22 if all the IPOs are not sold at that time.Applications can be submitted through C-ASBA. Prabhu Capital is the sales manager in this IPO.
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%.
| Union Life Insurance Company Limited | |||
|---|---|---|---|
| Percentage | Units | Amount (Rs.) | |
| Total Capital | 100% | 15,050,000 | 1,505,000,000 |
| Total Issue | 30% | 6,450,000 | 645,000,000 |
| Employees | 5% of IPO Units | 322,500 | 32,250,000 |
| Mutual Fund | 5% of IPO Units | 322,500 | 32,250,000 |
| Public | – | 5,805,000 | 580,500,000 |
| Issue Manager | Prabhu Capital Limited | ||
| Issue open date | Ashad-24 2078 | ||
| Issue closing date (earliest) | Ashad- 28 2078 | ||
| Issue closing date (late) | Shrawan-07, 2078 | ||
| Minimum application | 10 | ||
| Maximum application | 32,250 | ||
Rating
Credit rating agency ICRA Nepal has given ‘ICRNP IR BBB’ rating to Union Life. This indicates that there is an average risk in the company’s ability to bear financial obligations. ICRA gave the rating on May 17, 2021. This rating will remain valid until May 16, 2022.
How many shares to fill?
Recently, the number of investors applying for IPO has reached more than 2 million.A total of 2,087,317 investors had applied for the IPO of Jeevan Vikas Microfinance, which was distributed on Wednesday.
Similarly, 2 million 36 thousand 245 people have applied for the IPO of Manakamana Smart Microfinance, which was closed on Monday (July 7).Therefore, based on the applications received in the past, the investors have to rely on luck to get the shares of Union Life.
The company has opened 5.8 million lots for the public.On this basis, even if the distribution is done at a minimum rate of 10 lots, only 580,500 investors will get the IPO.Therefore, it seems to be enough to apply for 10 lots in the IPO of Union Life.
However, the company has made arrangements to apply for a minimum of 10 lots and a maximum of 32,250 lots.
Company details
Union Life Insurance Company Limited is a company established under the Companies Act, 2063 BS and licensed to conduct insurance business in accordance with the Insurance Act, 2049 BS and Insurance Regulations, 2049 BS.
The registered office of this company is Siddharthnagar Municipality Ward no. 8, is in Rupandehi.The main place of business is Kathmandu Municipal Corporation ward no. 10. New Baneshwor is in Kathmandu.
Union Life has been doing insurance business since September 19, 2074 BS.At present, the insurance company is providing insurance services from 204 offices including various branches and sub-branches.
As per the need, with the approval of the concerned body, the branch and sub-branch office can be established in the country.
Use of funds From IPO
| S.N | Particulars | Amount |
|---|---|---|
| 1 | Investment in Bonds/Debentures | 161,250,000 |
| 2 | Fixed Deposit in Commercial Bank | 258,000,000 |
| 3 | Fixed Deposit in Development Bank | 96,750,000 |
| 4 | Fixed Deposit in Microfinance Companies | 64,500,000 |
| 5 | Investment in Public Limited Companies | 64,500,000 |
| Total | 645,000,000 | |
Capital structure and financial projection
The authorized capital of Union Life Insurance is Rs 2.15 billion and the issued capital is Rs 2.15 billion.Out of the issued capital, Rs 1.5 billion has been paid by the founding shareholders.The remaining IPO worth Rs 645 million is about to be issued.
After the IPO, the paid-up capital will reach Rs 2.15 billion.After the IPO sale, the founder’s share in the company will be 70% and the general share will be 30%. Union Life has projected to earn a net profit of Rs 89.5 million by the end of the current fiscal year.
Similarly, it is estimated to earn a profit of Rs. 133.9 million in FY 2078-79 and Rs. 188.32 million in FY 2079-80. The company has no immediate plans to raise capital. The capital of Rs 2.15 billion is projected to remain the same after the IPO sale till FY 2079-80. Meanwhile, earnings per share is projected to reach Rs 4.17 by the end of the current fiscal year.
Similarly, earnings per share is estimated to reach Rs 6.23 in FY 2078-79 and Rs 8.76 in FY 2079-80. At the end of the current fiscal year, the net worth of this insurance is estimated to reach Rs 136.52 per share and Rs 142.75 in the fiscal year 2078-79.
Management and basic shareholders
Manoj Kumar Lal Karna has assumed the responsibility of the Chief Executive Officer of Union Life Insurance.Karna has studied till graduation.
Karna has worked in the insurance sector for more than 20 years.He has worked at the top management level of non-life and life insurance companies, the company said.So far, the company has 13 basic shareholders.
Out of which, Shekhar Golchha holds 3 million shares and Shahil Kumar Agrawal holds 3 million shares.Similarly, Shulabh Agrawal has held 2.715 million shares.Currently, the company’s board of directors includes chairman Shulabh Agrawal, Seema Golchha, Sandeep Kumar Agrawal, Jeevan Kumar Agrawal and independent expert director Devi Prasad Sharma.
Financial Status :
| Particulars | Acutal | Estimated* | ||||
|---|---|---|---|---|---|---|
| 2074/2075 | 2075/2076 | 2076/2077* | 2077/2078 | 2078/2079 | 2079/2080 | |
| Paid-up capital (‘000) | 1,505,000.00 | 1,505,000.00 | 1,505,000.00 | 2,150,000.00 | 2,150,000.00 | 2,150,000.00 |
| Reserves & Surplus (‘000) | 80,181.15 | 204,963.58 | 656,455.07 | 706,679.17 | 827,233.52 | 996,721.37 |
| Contingent Fund (‘000) | 8,909.02 | 22,773.73 | 72,939.45 | 78,519.91 | 91,914.84 | 110,746.82 |
| Insurance Fund (‘000) | 400,966.70 | 2,208,570.58 | 4,364,129.33 | 9,130,008.62 | 18,854,165.38 | 34,823,450.18 |
| Net Profit (‘000) | 76,599.90 | 138,647.15 | 501,657.21 | 89,574.74 | 133,949.28 | 188,319.83 |
| Earnings per share (Rs.) | 5.09 | 9.21 | 33.33 | 4.17 | 6.23 | 8.76 |
| Net worth per share (Rs.) | 105.92 | 115.13 | 148.46 | 136.52 | 142.75 | 151.51 |
| Return on Equity (%) | 4.81% | 8.00% | 22.45% | 3.05% | 4.36% | 5.78% |