General Insurance Corporation of India (GIC Re), the nation’s largest reinsurance company, saw a significant turnout for its offer for sale (OFS) on Wednesday, with bids amounting to Rs 2,300 crore on the first day. However, the demand fell short of the total issue size, with institutional investors bidding for only 58 million shares out of the 119 million offered. Most bids approached the floor price of Rs 395 per share, as indicated by data from stock exchanges.
An additional 11.9 million shares set aside for retail investors will be auctioned on Thursday. Despite the strong bidding on the OFS’s opening day, GIC Re’s share price fell by 5.6 percent to close at Rs 398 in secondary market trading.
The government had aimed to divest up to 6.78 percent of its stake in GIC Re through this OFS. However, it will likely achieve a divestment of less than 3.4 percent, falling short of its goal. To meet the 25 percent minimum public shareholding requirement, the Centre will need to divest an additional 7.4 percent in future offerings. As of the end of the June quarter, the government retained an 85.78 percent stake in the reinsurer.
Over the past year, GIC Re’s shares have surged by over 75 percent, reflecting the company’s strong performance. GIC Re is currently valued at Rs 69,825 crore.
The funds raised from the GIC Re disinvestment will be allocated to the miscellaneous capital receipt account. The Centre aims to raise Rs 50,000 crore through such disinvestments in the current fiscal year. Prior to the GIC Re sale, the total receipts stood at Rs 815 crore, according to the Department of Investment and Public Asset Management (Dipam) website.
In the previous fiscal year, the government mobilized Rs 16,507 crore through stakes divestments in listed companies. GIC Re’s initial public offering (IPO) in October 2017 had raised Rs 11,176 crore by divesting a 14.22 percent stake, with shares priced at Rs 456 per share on an adjusted basis.
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