Finance ministry to sell 6.78% stake in GIC Re for Rs 4,700 crore

Stake sale for non-retail investors begins on Wednesday, retail investors to bid on Thursday

The Union Ministry of Finance will dilute a 6.78 per cent stake in public-sector reinsurance company General Insurance Corporation of India (GIC) Re to garner around Rs 4,700 crore.

The stake sale, for the first time since the listing of the reinsurance company in 2017 through the offer-for-sale (OFS) route, will begin on Wednesday for non-retail investors.

“Retail investors and GIC employees can bid on Thursday. The government will divest 3.39 per cent equity with an additional 3.39 per cent as green shoe option,” Secretary, Department of Investment and Public Asset Management, posted on social media platform X.

The floor price for the OFS is expected to be set at approximately Rs 395 per share, which represents an estimated 6 per cent discount compared to the current market price (CMP). On Tuesday, the share price of GIC Re ended at Rs 420.8 after declining 1.4 per cent.

The government currently owns an 85.78 per cent share in GIC Re. This action mirrors a strategy used during LIC’s initial public offering (IPO), where the government divested 3.5 per cent of its stake and intended to sell an additional 1.5 per cent to support the insurer’s inclusion in index funds.

In April, GIC Re Chairman and Managing Director Ramaswamy Narayanan had told Business Standard that he expects the government to begin the process of divesting around a 10 per cent stake in the reinsurer after the general elections, though no timeframe has been decided. “I think it is after (elections) that the activity will start. It’s a call for the government to take more than us on stake sale,” he had told Business Standard.

In an interview with Business Standard published on Monday, Narayanan said the insurer would have to meet the minimum public shareholding of 25 per cent.

“Currently, it is about 14 per cent. So, that is where the interest came from, and it is clear that it will be an OFS by the government because we don’t need capital. Our solvency is at a very good position,” he said.

The government has stopped setting a separate disinvestment target starting FY24. The FY25 Union Budget has set the target for miscellaneous capital receipts, including disinvestment, at Rs 50,000 crore compared to the revised estimate of Rs 30,000 crore for FY24.