GIC Re, New India scout for merchant bankers for IPOs

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Mumbai | Published: April 6, 2017 4:05:50 AM

General Insurance Corporation of India (GIC Re) and New India Assurance Co have started search for merchant bankers to manage their initial public offerings (IPOs).

April Fool's Day, insurance, insurance agents, insurance premium, april fool prank, ULIPs, investments, absolute returnsIn January, the Cabinet Committee on Economic Affairs (CCEA) had approved listing of the five state-owned general insurance companies and reducing the government’s stake in these companies from 100% to 75%.

General Insurance Corporation of India (GIC Re) and New India Assurance Co have started search for merchant bankers to manage their initial public offerings (IPOs).

However, the size of the IPO has not yet been decided by the insurers.

In January, the Cabinet Committee on Economic Affairs (CCEA) had approved listing of the five state-owned general insurance companies and reducing the government’s stake in these companies from 100% to 75%.

The five state owned insurers are — New India Assurance Co Ltd, Oriental Insurance, National Insurance, United India Insurance and GIC Re.

The Department of Investment and Public Asset Management (DIPAM) in its request for proposal (RFP) said the size of the IPO for GIC Re and its structure will be decided by the government or the company in consultation with selected bankers and legal advisors.

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Senior officials in the insurance industry say both the IPOs are likely to hit the markets in next four-six months.

GIC Re would appoint up to eight merchant bankers for managing its IPO.

Merchant bankers have to submit bids by April 18. According to its RFP, New India Assurance will appoint seven merchant bankers for its issue.

“With the kind of growth seen in the general insurance sector in the last one year, we expect the IPOs to be successful. However, we also believe that GIC Re and New India would be the first set of general insurers to list on the stock exchanges. While other players would come in the last quarter of the current fiscal year,” said a senior official from a leading insurance company on condition of anonymity.

Senior officials in the insurance sector say they are expecting a price to book multiple of anywhere between 1.2 times and 1.5 times while offering their shares to the public. The government can raise anywhere between

`18,400 crore and `23,000 crore by offloading its 25% stake in five companies. Officials, however, said the government might be able to raise more money if the markets are conducive. The data from general insurance council also show that up to February 2017, gross direct premium underwritten by the industry was `1.13 lakh crore, compared with `86,526 crore in February 2016, a growth of around 32%.

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