The Union Finance Ministry will dilute a 6.78 per cent stake in public sector reinsurance company General Insurance Corporation of India (GIC) Re to garner around Rs 4,700 crore. The stake sale, for the first time since the listing of the reinsurance company in 2017 through the offer for sale (OFS) route, will begin on Wednesday.
“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. Government will divest 3.39 per cent equity with an additional 3.39 per cent as green shoe option,” secretary, Department of Investment and Public Asset Management (DIPAM) posted on social media platform X.
The floor price for the OFS is expected to be set at approximately Rs 395 per share, which represents an estimated 6 per cent discount compared to the current market price (CMP). On Tuesday, the share price of GIC Re ended at Rs 420.8 after declining 1.4 per cent.
The government currently owns an 85.78 per cent share in GIC Re. This action mirrors a strategy used during LIC’s initial public offering (IPO), where the government divested 3.5 per cent of its stake and intended to sell an additional 1.5 per cent to support the insurer’s inclusion in index funds.
In April 2024, Ramaswamy Narayanan, chairman and managing director of GIC Re, told Business Standard that he expects the government to begin the process of divesting around a 10 per cent stake in the public sector reinsurer after the general elections, though no timeframe has been decided.
“I think it is post (elections) that the activity will start. It’s a call for the government to take more than us on stake sale,” he told Business Standard.
Narayanan, in an interview with Business Standard published on Monday, said that the public sector enterprise will have to meet the minimum public shareholding of 25 per cent.
“Currently, it is about 14 per cent. So, that is where the interest came from, and it is clear that it will be an offer for sale (OFS) by the government because we don’t need capital. Our solvency is at a very good position,” he added.
The government has stopped setting a separate disinvestment target starting FY24. The FY25 Union Budget has set the target for miscellaneous capital receipts, including disinvestment, at Rs 50,000 crore compared to the revised estimate of Rs 30,000 crore for FY24.
First Published: Sep 03 2024 | 7:27 PM IST
