Monday, 15 December 2014 00:00
Arpico Insurance Ltd.’s Rs. 79.56 million Initial Public Offering (IPO) successfully concluded on Friday, its official opening day.
The company said that issue of 6.63 million new ordinary voting shares at Rs. 12 each was oversubscribed, with applications received above the required amount.
The basis of allotment and final figures will be released soon.
Managers to the issue was Arpico Ataraxia Asset Management Ltd. and placement agent to the issue was Richard Pieris Securities Ltd.
Arpico Insurance went for the IPO as part of insurance industry regulator-initiated listing requirement as well as raise capital and provide an opportunity to the public participate in the future growth prospects of AINS, one of the emerging life insurance companies positioning itself with the concept of ‘Insurance for the Living’.
Currently, AINS is in its third year of successful business operations and operates with 19 branches. The company plans to expand the operations further and take its growth to the next level. Therefore, AINS invites the general public to be a part of its future growth and also be benefitted from the success of one of Sri Lanka’s largest group companies, Richard Pieris & Company PLC.
According to the Insurance Board of Sri Lanka, as part of its initiative to transform the rule-based supervisory system to a risk-based supervisory system, it is expected that all the insurers will be required to comply with the requirement to maintain its risk-based capital requirement at Rs. 500 m. Hence, Arpico Insurance will have to raise additional capital to maintain the risk-based-capital at the required level.
Via the IPO, Arpico Insurance intends to utilise Rs. 74.74 m (its projected shortfall in risk based capital requirement) as at the end of 2015, thereby meeting IBSL requirement.
Arpico Insurance as a budding life insurer in the local insurance industry also expects to broaden its reach concentrating on the target market segments. Hence, Arpico Insurance plans to set up 12 new branches by the end of 2015, thereby increasing its physical branches to 31 from the current 19 branches.
The estimated cost per branch would be Rs. 2.56 m and the expected total cost would be Rs. 30.72 m. Arpico Insurance intends to fund this expansion via part of the capital raised from the IPO.
As for the current status of the new branches, AINS has decided on the locations for the expected branch expansion and expects to open up three branches in 2014 December in Moratuwa, Ambalantota and Matale. The remaining nine branches are expected to be opened in 2015.