Zenith Islami Life plans to go public

TBS Illustration

Zenith Islami Life Insurance plans to raise Tk15 crore through an initial public offering (IPO) from the capital market to comply with regulatory requirements and expand its business.

The company has applied to the Bangladesh Securities and Exchange Commission (BSEC) to issue 1.5 crore ordinary shares at a face value of Tk10 each.

Under its business expansion plan, the life insurer aims to invest in FDR, government treasury bonds, the capital market, and cover IPO expenses.

Specifically, the firm intends to allocate Tk8.40 crore for government treasury bonds, Tk2.80 crore for investment in FDR, Tk2.80 crore for investment in the capital market, and Tk1 crore for IPO expenses.

Zenith Islami Life Insurance Limited, a 4th generation life insurance company, was established in August 2013. It engages in individual life and group insurance business.

S M Nuruzzaman, chief executive officer of the company, told The Business Standard that the company had planned to enter the capital market a few years ago.

However, the life insurer could not implement this plan due to the effects of the Covid-19 pandemic. Now, the insurer has filed with the commission for an IPO to meet regulatory demands and to achieve greater compliance by entering the capital market, which will have a positive impact on the company's financials, he added.

According to the prospectus of the company, as of the end of December 2023, Zenith Islami Life collected a net premium of Tk28.34 crore, compared to Tk30.32 crore in the previous year. In 2023, the balance of the life fund stood at Tk17.76 crore, almost double compared to a year ago.

Its investment has been increasing gradually and stood at Tk32.76 crore, which is 16% higher compared to a year ago. The authorised capital is Tk100 crore, while its paid-up capital is Tk22.50 crore.

In September 2020, the securities regulator exempted 26 insurance companies from the securities rule to enable them to be listed on the stock market under the fixed price method, including Zenith Islami Life Insurance.

These insurance companies can apply to the securities regulator for IPOs aiming to raise less than Tk30 crore. The minimum amount for raising capital through IPOs is now Tk15 crore for insurance companies. Under this facility, Zenith Islami Life has applied to the commission for an IPO.

However, the securities regulator has set a requirement for companies with less than Tk30 crore in paid-up capital to invest at least 20% of their equity in the capital market if they want to get listed.

Additionally, any of these companies will have to raise at least Tk15 crore by offloading shares to the stock market.