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Last Updated : Nov 04, 2018 12:30 PM IST | Source: Moneycontrol.com

Sale of 10% stake in New India Assurance, GIC Re may fetch Centre about Rs 9,500 crore

The GIC stock closed at Rs 327 on the BSE on November 2. So, a 10 percent stake in the company at current prices would amount to Rs 5,740 crore.

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The Centre has put on hold a plan to merge three public-sector general insurance companies -- United India Insurance Co (UIIC), The Oriental Insurance Company (OIC) and National Insurance Company (NIC) -- but may soon sell around 10 percent each in New India Assurance (NIA) and General Insurance Corporation of India (GIC Re) in Q4 FY19.

According to a report in the Financial Express, an offer for sale (OFSs) at the current market prices in GIC Re and NIA, which were listed last year, could earn the government around Rs 9,500 crore.

The GIC stock closed at Rs 327 on the BSE on November 2. So, a 10 percent stake in the company at current prices would amount to Rs 5,740 crore.

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The report further suggests that a ministerial panel led by Finance Minister Arun Jaitley approved the OFSs in NIA and GIC Re. The panel also directed the Department of Investment and Public Asset Management (DIPAM) to commence the process to appoint merchant bankers.

In October last year, the Centre sold a 12.5 percent stake in GIC Re, India’s biggest reinsurer, raking in Rs 9,704 crore. The newly listed company also issued fresh shares to raise Rs 1,553 crore for business expansion. It now owns 85.78 percent in GIC Re. The listing of NIA, in November 2017, fetched the government Rs 7,653.

The Centre has raked in Rs 15,289 crore from disinvestment so far this year as opposed to Rs 67,102 crore (including the ONGC-HPCL deal) assured at the same time last year.

If the OFSs in the two general insurers falls through, it could pad up the disinvestment receipt of the Centre.

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First Published on Nov 4, 2018 12:29 pm
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