GIC Re valued at Rs 80,000 crore; $1.7 billion IPO largest in insurance
The IPO consists of a primary issue of 17.20 million equity shares by GIC Re and offer for sale of 107.50 million equity shares by the government.
General Insurance Corporation of India (GIC Re) has been valued at Rs 80,000 crore (considering the upper band for the issue) for its upcoming initial public offering (IPO) that opens on October 11 and closes on October 13. With a Rs 11,370 crore IPO ($1.7 billion), this will be the second biggest in the country after Coal India (2010).
The IPO consists of a primary issue of 17.20 million equity shares by GIC Re and offer for sale of 107.50 million equity shares by the government. GIC Re is a government-owned reinsurance company. The price band for the issue is Rs 855 to Rs 912.
Alice G Vaidyan, Chairman and Managing Director of GIC Re, said that going forward, they will be open to inorganic growth opportunities. “We are also looking to grow our international business and will be expanding in the life reinsurance space globally,” she added.
The reinsurer had a gross premium of Rs 33,741 crore and a profit after tax of Rs 3,141 crore in FY17. Bankers said that the huge market share and the fact that they did not have any major competitor in India has led to these valuations.
A discount of Rs 45 on the offer price is being offered to retail individual bidders and to eligible employees bidding in the employee reservation portion.
GIC Re is looking to utilise the net proceeds of the fresh issue towards augmenting its capital base to support the growth of the business and to maintain current solvency levels as well as general corporate purposes.
The reinsurer purchases retrocessional coverage which consists of reinsurance purchased to cover a portion of the risks that it reinsures. GIC writes reinsurance for every non-life and over half of the Indian life insurers.The solvency ratio stood at 241 percent for FY17 and 183 percent for the first quarter of FY18. As per regulatory norms, insurers are required to maintain 150 percent solvency at all times.