GIC RE gets bids worth Rs 2,300 cr; demand only half of total issue size

The offer for sale in General Insurance Corporation of India (GIC Re) garnered bids worth nearly Rs 2,300 crore on Wednesday, the first day of the issue.

The offer for sale (OFS) received bids for 58 million shares from institutional investors as against a total of 119 million on offer. Most bids came closer to the floor price of Rs 395, data provided by stock exchanges showed.

Another 11.9 million shares reserved for retail investors will be auctioned on Thursday. Shares of GIC Re fell 5.6 per cent to end at Rs 398 in the secondary market trade.

Through the OFS, the government was looking to divest as much as 6.78 per cent stake. However, it will have to settle for divestment of less than 3.4 per cent. The Centre will have to divest another 7.4 per cent in future to meet the 25 per cent minimum public shareholding requirement.

At the end of June quarter, the government held 85.78 per cent stake in the reinsurer.

Shares of GIC Re, the country’s largest reinsurance company, have rallied over 75 per cent in the past one year. The company is currently valued at Rs 69,825 crore.

The proceeds earned from the GIC Re disinvestment will go to the miscellaneous capital receipt account. The Centre is eyeing mobilisation of Rs 50,000 crore through this route during the current fiscal. Prior to the GIC Re share sale, the total receipt stood at Rs 815 crore, according to Dipam website.

Last fiscal, the government had mobilised Rs 16,507 crore by divesting stakes in listed companies. The government had come out with GIC Re’s IPO in October 2017. Back then, it had raised Rs 11,176 crore by divesting 14.22 per cent stake. Shares were priced at Rs 456 per share (on an adjusted basis) in the IPO.