Government to dilute 6.78 percent stake in GIC Re for nearly Rs 4,700 crore

Govt of India holds 85.78% stake in GIC Re.

Government is launching an OFS on September 4 to dilute 6.78 percent stake in GIC, for the first time since the listing of the state-run reinsurance company.

"Offer for sale in General Insurance Corporation of India (GIC) opens for Non-Retail investors. Retail investors and Employees of GIC can bid on Thursday. Government will divest 3.39% equity with an additional 3.39% as green shoe option," Secretary, DIPAM confirmed in a post on social media platform X.

The floor price for the Offer for Sale is likely to be Rs 395 per share, implying roughly 6% discount to the CMP, CNBC-Awaaz reported citing sources. At this floor price, the size of the OFS is pegged at around Rs 4,701 crore.

The OFS is for 5.95 crore shares with a green shoe option of an equal number of shares, it is reported. Government of India holds 85.78% stake in GIC Re, which is the largest company engaged in the business of Reinsurance.

For GIC Re employees, 50,000 shares have been allocated, representing 0.04% of the total offering. Retail investors can choose to bid either at the floor price or at a ‘cut-off price,’ which will be the lowest price at which shares are allocated to non-retail investors on the preceding day. At least 25% shares in the OFS are reserved for mutual funds and insurers, while 10% of the OFS is reserved for the retail investor.

GIC is the only Indian Reinsurer registered with the regulatory authority, and listed on the stock exchanges.

Shares of GIC are higher by 35 percent so far this year, and are nearly flat since listing.

Over the long term, GIC 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. Government’s increased focus on infrastructure spending is likely to have a multiplier impact on their business, GIC has said, supporting investment and manufacturing activities.