In the absence of any major strategic sale, barring IDBI Bank, the Centre is likely to rely on share sales in small lots or offer-for-sale to meetings sell-off target of Rs 50,000 crore for the current financial year.The sale will occur over two days: the issue will open on Wednesday for non-retail investors, while retail investors and employees can bid on Thursday.
Govt currently holds about 85.8% stake in GIC Re, the country’s sole reinsurance company which supports insurers by sharing risk. The share sale is part of govt’s strategy to comply with regulatory norms and reduce holdings in public sector enterprises. GIC Re’s IPO, which was launched in 2017, had a total value of Rs 11,176 crore. Coal India tops the list in terms of offer-for-sale – it raised Rs 22,400 crore through an OFS in 2015 (see graphic).
GIC Re has a market cap of Rs 73,904 crore, and at the floor price, the market value works out to Rs 69,298 crore.
Govt plans to offer up to nearly 6 crore equity shares, which represent 3.4% of GIC’s total paid-up share capital. There is an option to sell an additional 5.95 crore shares, potentially raising the total to 11.95 crore shares if the oversubscription option is fully exercised.
For GIC Re employees, 50,000 shares are reserved, making up 0.04% of the total offer. Retail investors have the option to bid at the floor price or at a ‘cut-off price’, which will be the lowest price at which shares are sold to non-retail investors on the previous day.
A minimum of 25% of the shares are reserved for mutual funds and insurance companies, while 10% are reserved for retail investors. The offer may be cancelled if there are not enough bids above the floor price or if there are issues with settlement obligations. The sale will be conducted through both the BSE and the NSE.
In Q1 FY25, GIC Re’s net profit grew 42% to Rs 1,036 crore from Rs 731 crore a year ago. Its gross premium income grew by 39% to Rs 12,406 crore from Rs 8,918 crore in the previous year. Investment income decreased by 21.5% to Rs 2,007 crore from Rs 2,559 crore. The incurred claims ratio improved by 5.3 percentage points, moving from 95.1% to 89.8%. The combined ratio decreased by 8.9 percentage points, dropping from 118.5% to 109.6%.