Exclusive: Govt plans to offload 10% each in GIC, New India Assurance by Aug ’24 via OFS route

General Insurance Corporation of India

The government is aiming to sell at least 10 percent each in the two listed public sector insurance companies, General Insurance Corporation of India (GIC) and New India Assurance Company, ahead of a deadline to meet the minimum public shareholding norm, a senior government official said.

The government holds 85.78 percent in GIC and 85.44 percent in New India Assurance Company Ltd.

“The finance ministry is looking at an OFS (offer for sale) in GIC and New India Assurance, both of which have above 85 percent government holding currently. The government is trying to bring out an OFS in each before August 2024,” the official told Moneycontrol.

The Securities and Exchange Board of India (SEBI) had exempted both from the minimum public shareholding norm till August 2024. According to SEBI regulations, a publicly listed company needs to have a minimum of 25 percent of its shares held by the public to be eligible to stay listed.

The finance ministry has already put out feelers to investors but has met with lukewarm interest. If the government fails to reduce its holding to at least 75 percent, it could consider asking the market regulator that the cut-off date be delayed further.

“But the issue is that currently there is no investor interest in the public insurance companies. In case the government fails, the economic affairs department of the finance ministry will seek an exemption,” the official cited above said.

An OFS is an instrument through which promoters in a listed company sell their shares directly to the public.

There is no capital infusion needed in these two non-life public insurance companies in this fiscal as they are financially sound, another senior government official had said earlier. “In fact, one of the insurance companies will also give a dividend to the government in FY24,” he said.

GIC had reported profit after tax (PAT) of Rs 6,312.50 crore for FY23 compared to a PAT of Rs 2,005.74 crore for FY22.

New India Assurance reported a doubling of net profit to Rs 260 crore for the Q1FY24. It had recorded a net profit of Rs 118 crore in the year-ago period. Its total income rose to Rs 9,274 crore in the first quarter of the current fiscal, against Rs 8,143 crore in the previous year.

New India Assurance, which is headquartered in Mumbai, has a presence in 28 countries.