Finance Ministry to sell 6.78% stake in GIC Re for ₹4,700 cr

The Union Ministry of Finance will sell a 6.78% stake in public sector reinsurance company General Insurance Corporation of India Re (GIC Re) to garner around ₹4,700 crore. The floor price of the offer will be ₹395 per equity share.

"Seller proposes to sell up to 5,95,12,000 equity shares of face value of ₹5 each representing 3.39% of the total stake, with an option to additionally sell 5,95,12,000 or 3.39% stake," GIC says in an exchange filing.

Additionally, 50,000 shares will be offered to eligible employees, who may apply for shares amounting up to ₹5 lakh.

The offer will take place over two trading days on a separate window of the stock exchanges i.e. September 4 and 5. Only non-retail investors can place their bids on September 4, 2023, while retail investors can place bids on T+1 day i.e. September 5, 2024. “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% equity with an additional 3.39% as green shoe option,” DIPAM secretary said on X.

The allocation will be at or above the floor price on a price priority basis at multiple clearing prices, except in the case of retail investors and employees, who can bid at the cut-off price.

A minimum of 25% of the offer will be reserved for mutual funds and insurance companies, while 10% of the offer will be reserved for retail investors.

Shares of GIC are trading 4.33% lower than yesterday at ₹403, down 4.33%, on the BSE. At the current share price, the scrip is trading 10% below its 52-week high of ₹467 hit on February 8, 2024, taking its m-cap to ₹70,702.32 crore.

In Q1 FY25, GIC's net profit grew 42% to ₹1,036 crore compared to ₹731 crore a year ago. Its gross premium came in at ₹12,046 crore, up 39% from ₹8,918 crore in the previous year.

GIC Re was incorporated as a part of the GoI’s move to nationalise the general insurance business. GIC Re was wholly owned by the GoI up to FY17; it sold a 14.22% stake in GIC Re through an initial public offering (IPO) on October 25, 2017. The GoI currently holds 85.78% shares of GIC, while 14% is held by the public.

In February this year, Care ratings 'Reaffirmed' its 'CARE AAA; Stable' rating on issuer rating of GIC Re. "The rating of General Insurance Corporation of India (GIC Re) has been reaffirmed, factoring in the majority ownership by the Government of India (GoI holds 85.78% stake in GIC Re) and GIC Re’s strategic importance as the dominant Indian reinsurer," CareEdge said.