GIC OFS subscribed 1.08 times; Finance Ministry to exercise green shoe option

The green shoe option will sell another 5.95 crore equity shares

GIC Re's offer for sale (OFS) was subscribed 1.08 times by non-retail investors on September 4, after which the Union Finance Ministry said it will exercise the green shoe option.

“Offer for Sale in GIC Re got a positive response today from Non Retail investors. Issue subscribed 1.08 times of base size. Government has decided to exercise the green shoe option,”  Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said in a post on X.

"Retail investors and employees of GIC Re get a chance to bid on September 5," he added.

The Government of India holds an 85.78 percent stake in GIC Re, the largest company engaged in the reinsurance business. It is diluting its stake in GIC for the first time since the listing of the state-run reinsurance company. GIC is the only Indian reinsurer registered with the regulatory authority, and listed on the stock exchanges.

The floor price for the OFS is set at Rs 395 per equity share. The seller plans to offer up to 5.95 crore equity shares, each with a face value of Rs 5, representing 3.39 percent of the company’s total paid-up equity share capital. Additionally, the green shoe option will sell another 5.95 crore equity shares as part of the base offer, with oversubscription bringing the total offer to 11.90 crore shares, or 6.784 percent of the company’s equity, GIC Re stated in a BSE filing earlier.

Around 50,000 equity shares (0.04 percent of the offer shares) may be offered to eligible employees of the company. The state-run insurer also mentioned that employees may apply for equity shares amounting up to Rs 5,00,000.

In the long term, GIC Re has said that it expects India's insurance market to expand and insurance penetration as well as density to rise in sync with the growth of the economy. The Centre's increased focus on infrastructure spending is likely to have a multiplier impact on their business, GIC Re has said, supporting investment and manufacturing activities.