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Govt plans to reduce its stake in New India Assurance and GIC Re

Plan to merge, list three insurers scrapped for now

Arup Roychoudhury  |  New Delhi 

Illustration: Ajay Mohanty
Illustration: Ajay Mohanty

After the initial public offerings of and last year, the Centre is planning to reduce its stake further in the two companies with offers for sale later this year, Business Standard has learnt.

Additionally, the Centre’s plans to merge National Insurance, and United India Insurance and list the merged entity on the bourses has effectively been put on the backburner for now, with officials saying that just merging the three companies will be a time-consuming process.

GIC Re’s was carried out in October and was then India’s third-biggest

It was oversubscribed by 1.37 times and fetched the exchequer Rs 97 billion. Assurance’s was in November. It wasn’t received as well, and with the support of Life Insurance Corporation buying stake, the exchequer received Rs 76.5 billion.

“Once the one-year lock-in period for these two companies end, we are considering for them later this year. The quantum and percentage of stake to be sold through the exchanges is still being decided,” said a senior official.

ALSO READ: GIC Re Q1 net profit rises 98% to Rs 7.1 bn; gross premium income up 9.3%

The Centre currently holds 85.7 per cent share in GIC Re and 85.4 per cent in

“The merger of three insurers and subsequent IPO would have been a big-ticket move in terms of proceeds, as the Centre would have earned money in the merger as well as the listing process,” said a second official.

He added, “Merging three insurers is a mammoth process, and the Department of Financial Services has its hands full, with a lot of banking sector issues. Hence, the proposal is not being taken now.”

“Merging will take more than a year. The listing will only happen after that and will take further time,” the person said. The move was first announced by Finance Minister Arun Jaitley in his 2018-19 Union Budget speech.

Officials in the are still hoping to get something out of general insurers, hence the plan for the OFSs of GIC and With the scrapping of Air India’s privatisation, the centre now faces an uphill task in looking to meet a budgeted estimate of Rs 800 billion from

First Published: Sat, August 04 2018. 21:29 IST