State-owned General Insurance Company (GIC) New India Assurance is planning to launch an initial public offer (IPO) by September. With a book value of over Rs 50,000 crore, New India Assurance’s IPO would be the first ever public offering by any non-life insurance company.
Speaking at Business Standard Insurance Round-table, G Srinivasan, chairman, New India Assurance said the public offering is expected to hit the markets in next six months and will comprise of both an offer for sale(OFS) and a fresh issue. While the insurer has already received a nod from the Finance Ministry for the share sale, the company will soon start the process of appointing investment bankers for the issue. According to sources, size of the IPO could be in the range of Rs 5,000 – Rs 6,000 crore. In January, the Union Cabinet cleared the proposal to list five of the state-owned non-life insurance players including New India Assurance, National Insurance, Oriental Insurance and United India. The Cabinet note approved a dilution of up to 25 per cent by the Centre in all the five insurers. According to the Union Budget Finance Bill, the government is expecting to mop up Rs 11,000 crore by paring its stakes in various GICs. However, the total value of the IPOs would be much higher as they would also comprise of fresh issue component.
Market participants say listing of the GICs would provide a great opportunity for investors as the sector offers high growth potential and is under-represented in the listed space. Currently, ICICI Prudential is the only publicly listed insurance company in India.
“The insurance sector in India has seen tremendous growth both in the Life and non-Life segments, particularly in recent times. We believe that public offerings from market leaders in this sector are a great opportunity to unlock value for these companies and will be well received by investors,” said Gesu Kaushal, executive director, Kotak Investment Banking.