State-Owned GIC Re May Raise Up To Rs 10,000 Crore In IPO
GIC Re’s IPO is part of government’s plan to divest 25% stake in five general insurers.
State-run reinsurer General Insurance Corporation of India has filed its draft red herring prospectus for an initial public offering.
The country’s only homegrown reinsurer is likely to raise Rs 8,000-10,000 crore, two bankers privy to the details told BloombergQuint requesting anonymity. The IPO is a combination of fresh issue and an offer for sale.
It’s part of the government’s plans to reduce its stake by 25 percent in its five fully owned non-life insurance companies.
Axis Capital, Citi, Deutsche Bank, HSBC and Kotak Investment Banking are the book runners for the offer. The price band and the bid lot size will be decided by the book managers after getting approval from the Securities and Exchange Board of India.
Through the IPO, the reinsurer will offload 12.47 crore equity shares at a face value of Rs 5 apiece. This translates to 14.22 percent of the company’s post-issue share capital.
The government will sell 10.75 crore shares through the offer for sale while the company will issue 17.2 lakh new shares.
GIC Re, which had a solvency margin of 2.41 as of March 31, plans to use the proceeds from the fresh issue to maintain it at current levels. As per insurance regulator’s guidelines, an Indian insurer is required to have a minimum solvency margin of 1.50.
The company will also use the proceeds to support its future growth and to meet any exigencies and expenses, the prospectus said.