Govt may raise over Rs 15,000 cr from IPOs of New India Assurance, GIC Re

Initial public offering of the two state-owned general insurance companies is likely to yield over Rs 15,000 crore to the exchequer, said merchant banking sources.

Out of the five state-owned general insurance companies, New India Assurance (NIA) and GIC Re are gearing up to hit the capital market over the next few weeks.

The government had estimated to garner about Rs 11,000 crore by diluting its stake in insurance companies as part of disinvestment plans for the current fiscal.

In view of the current market conditions, the government may easily get Rs 15,000 crore by diluting stake in these two companies, sources said, adding it could be upwards of Rs 15,000 crore.

Initial public offer (IPO) is a part of the government's plans to list four state-owned non-life insurers and the national reinsurer. These listings would help the government to meet its ambitious disinvestment target of Rs 72,500 crore for the current fiscal.

In case of GIC Re, the government will be selling 10.75 crore shares, whereas GIC Re itself is likely to sell 1.7 crore shares through IPO. Thus, a total of 12.4 crore shares of the reinsurer would be sold through the share sale offer, constituting 14.22 per cent of the company's post-issue share capital, as per the filing of the company.

The company registered a profit-after-tax of Rs 3,127 crore in FY2016-17, an increase of 9.8 per cent over the previous year. The net worth of the company stood at Rs 47,983 crore.

As far as New India Assurance, the largest public sector general insurance company, is concerned, the government will be selling 9.6 crore shares, whereas NIA itself will be selling 2.4 crore shares through IPO.

Thus a total of 12 crore shares of the non-life insurer would be sold through the share sale offer, constituting around 14.56 per cent of the company's post-issue share capital.