Things to know for prospective investors about IPO of Prabhu Life Insurance Limited; high chance of lottery for 10 units

Company Information:

Prabhu Life Insurance Limited (former Star Life Insurance Co. Ltd) was established on Mangsir-28, 2074. The company is licensed by the Insurance Board in 2016/2017. The company has been providing its services from 90 outlets and has 10,463 agents running individually and has 25 corporate agents spread across the country. The company is owned by Prabhu Group; a renowned business group in the country. The company is majorly promoted by Prabhu Bank Limited and Shangrila Development Bank Limited.

About the Issue:

Prabhu Life Insurance Company Limited issuing 6,000,000 units ordinary shares worth Rs. 60 crores to the general public from Mangsir-29, 2077. The early closing date of this IPO issue is on Poush-02, 2077 and if the issue is not subscribed till Poush-02 then this issue can be extended up to Poush-13, 2077.

Out of offered 6,000,000 untis; 5% of the issued capital i.e. 300,000 untis have been allotted for the employees of the company and 5% of the total capital have been allotted for the mutual funds. The remaining 5,400,000 units are for the general public.

Applications can be placed for a minimum of 10 units and a maximum of 50,000 units.

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

The paid-up capital will reach Rs. 2.00 Arba after the issuance of the public shares. After the IPO issue; public holding will be 30% and promoters holding will be 70%.

 

Percentage

Units

Amount

Total Capital

100%

20,000,000

2,000,000,000

Total Issue to Public (IPO)

30%

6,000,000

600,000,000

Employees

5% of IPO units

300,000

30,000,000

Mutual Fund

5%  of IPO units

300,000

30,000,000

Public

90% of IPO units

5,400,000

540,000,000

Issue Manager

Siddhartha Capital Limited

   

Issue Open Date

Mangsir-29, 2077

   

Issue Closing Date (Earliest)

Poush-02, 2077

   

Issue Closing Date (Late)

Poush-13, 2077

   

Minimum Application

10

   

Maximum Application

50,000

   

Credit Rating:

ICRA Nepal has assigned the issuer rating of [ICRANP-IR] BB+ (pronounced ICRA NP Issuer Double B plus) to Prabhu Life Insurance Limited (PLIL). Issuers with this rating have a moderate risk of default regarding timely servicing of financial obligations. ICRA Nepal has also assigned a grading of [ICRANP] IPO Grade 4, indicating below-average fundamentals, to the proposed initial public offering (IPO).

Grading Strengths:

  • Institutional ownership with brand sharing of ‘Prabhu’
  • High portion of long-term endowment business in overall premium earnings
  • Adequate reinsurance support
  • Adequate quality of investments with good investment earning potential

Grading Challenges:

  • Limited track record with a small market share
  • Subdued return indicators with a high cost of operations
  • Solvency profile

(SOURCE: ICRA Nepal)

Capital Structure:

Authorized Capital

 

Issued Capital

2,000,000,000

Current Paid-Up Capital

1,400,000,000

Paid-Up Capital After This IPO

2,000,000,000


Shareholding Structure:

 

Number of Shares

Amount

Percentage

Remarks

Promoter Shareholders

14,000,000

1,400,000,000

70%

Already Issued

General Public

6,000,000

600,000,000

30%

To be Issued

Total

20,000,000

2,000,000,000

100%

-

Board of Directors:

Board of Directors

S.N

Name

Position

1

Dr. Atma Ram Ghimire

Chairman

2

Mr. Subhash Amatya

Director

3

Mr. Maniram Pokharel

Director

4

Mr. Naresh Bahadur Malla

Director

5

Mr. Rameshwor Sapkota

Director

6

Mr. Apoorba Prasad Joshi

Director

Management Team:

Management Team

S.N

Name

Position

1

Mr. Narayan Prasad Poudel

Chief Executive Officer

2

Mr. Kishor Prasad Lamichhane

Dy. Chief Executive Officer

3

Mr. Namash Singh Deuja

Chief Operating Officer

4

Mr. Prayash Shrestha

Chief Business Officer

5

Mr. Prabhat Sibakoti

Chief Re-Insurance & Agency

6

Mr. Lekhnath Gautam

Chief Finance Officer

7

Mr. Yogendra Khatiwada

Head Training

8

Mr. Rujee Shrestha

Head Underwriting

Financial Highlights:

Particulars

Actual

Estimated*

2073/2074

2074/2075

2075/2076

2076/2077*

2077/2078

2078/2079

2079/2080

Total Paid-Up Capital ('000)

448,876.50

1,400,000.00

1,400,000.00

1,400,000.00

2,000,000.00

2,000,000.00

2,000,000.00

Reserve & Surplus ('000)

273.615

39,069.75

115,989.01

165,035.89

289,232.81

476,676.31

713,204.31

Contingent Fund ('000)

-

4,310.68

9,065.94

13,574.88

27,089.19

47,916.25

74,197.14

Insurance Fund

-

86,551.09

352,521.55

1,084,393.88

2,412,229.32

4,882,153.97

8,926,263.65

Gross Premium ('000)

-

114,383.64

473,851.00

1,197,837.90

1,963,154.29

3,241,472.50

4,864,144.56

Net Premium ('000)

-

111,942.28

455,910.82

1,159,435.58

1,925,712.08

3,131,049.63

4,697,851.98

Investment Income ('000)

2,587.40

138,831.57

159,613.88

184,127.81

340,175.36

616,228.55

1,008,325.82

Net Profit ('000)

1,322.19

52,452.15

81,674.52

53,552.06

135,143.11

208,270.55

262,808.89

Net Premium /Gross Premium (%)

-

97.87%

96.21%

96.79%

98.09%

96.59%

96.58%

Earnings per share (Rs.)

0.29

3.75

5.83

3.83

6.76

10.41

13.14

Net worth per share (Rs.)

100.06

103.59

106.56

112.94

114.82

126.93

139.37

Return on Equity (%)

0

3.98%

5.32%

3.39%

6.48%

8.95%

9.43%

How much to apply?

If we see the recently concluded IPO’s; more than 9 lakh applicants applied for the issue and we assume that the same or even more craze prevails in Prabhu Life Insurance Limited’s IPO too. Since 10 kitta rule exists for IPO; 540,000 applicants will be lucky enough to get the 10 shares of Prabhu Life insurance.

To sum up, if the same number of applicants (or more) who applied for previous IPO’s apply for this issue then there is a high probability of getting 10 units through luck draw. So, it is advisable to apply only 10 units (minimum) in the IPO issue of Prabhu Life Insurance Limited.