The Centre will sell up to 6.78% stake in the country’s only general reinsurer General Insurance Corporation (GIC Re) on Wednesday-Thursday to raise about Rs 4,700 crore based on the floor price of Rs 395/share for the offer for sale.
In an intimation to the stock exchanges, GIC said the government will sell up to 5,95,12,000 equity shares (3.39% stake) of the face value of Rs 5 each with an option to sell an additional 3.39% in case of over subscription, taking the total offer size up to 6.784%. The issue will open for non-retail investors on Wednesday and for retail on Thursday.
“Offer for sale in General Insurance Corporation of India (GIC) opens tomorrow for Non-Retail investors. Retail investors and Employees of GIC can bid on Thursday. The government will divest 3.39% equity with an additional 3.39% as green shoe option,” Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey said on ‘X’.
The share price of GIC closed at Rs 421.25 on the BSE on Tuesday, down 0.13% from the previous closing price. The OFS floor price is at a discount of 6.6% to Tuesday’s closing price.
Currently, the Centre owns 85.78% of GIC Re and needs to reduce its stake by 10.78 percentage points to 75% to meet the minimum public shareholding (MPS) of 25% in the company.
Currently, the government is following a calibrated disinvestment strategy with stake sales undertaken at opportune times without chasing targets. The government has estimated to mobilise Rs 50,000 crore through disinvestment and monetisation in FY25.
GIC is the only Indian reinsurer, which provides support to direct insurers in India and receives obligatory cessions on every policy by domestic general insurers.
In the global roadshows earlier this year, the GIC showcased its dominant position in the domestic market with a 67% share gross reinsurance premium of USD 4.4 billion (FY23). The rest of the shares are with foreign reinsurance branches (FRBs).
India’s general insurance market is estimated to grow at a compound annual growth rate (CAGR) of 9.9% during 2021- 2026. Reinsurance premiums in India are expected to touch USD 12 billion by 2025, according to investors’ presentations.
GIC Re is expected to maintain market leadership going forward on strong financials, adequate capacity and expertise.