India's only state-owned reinsurer, General Insurance Corporation of India (GIC Re), will launch its IPO next Wednesday, 11 October, aimed at raising INR115 billion (US$1.77 billion), which would make it the biggest share offer since Coal India raised INR152 billion in October 2010.
GIC Re, which filed its offer document with market regulator Securities and Exchange Board of India (SEBI) in August, plans to issue 17.2 million fresh equity shares and offer for sale 107.5 million existing shares by the government. This offer would constitute 14.22% of the post-offer paid-up equity share capital of the company. The IPO price per share is in the range of INR855 to INR912. Each share has a nominal value of INR5.
The IPO will close on 13 October. The shares are to be listed on the National Stock Exchange of India and Bombay Stock Exchange.Trading is scheduled to start on or around 25 October.
GIC Re plans to utilise the net proceeds of the fresh Issue towards (i) augmenting the capital base so as to support the growth of the business and to maintain current solvency levels; and (ii) general corporate purposes. Proceeds from the offer of existing shares will go to the government's coffers.
At least 10% of the post-offer paid-up equity share capital of the Corporation shall be offered to the public. A discount of INR45 on the offer price will be granted to retail individual bidders and to eligible employees bidding in the employee reservation portion.
In an interview with The Economic Times, Ms Alice G Vaidyan, GIC Re's Chairman and Managing Director, said of the IPO: “We have seen a lot of investor interest, both from foreign markets and from domestic markets and given the fact that GIC is in a very unique space as a reinsurer, with a dominant market share and a global book as well with a very good financial balance sheet and a very diversified investment portfolio, with a rating of A minus, we are very confident that there is investor appetite and the markets will respond very well to the issue.”
GIC Re is the largest reinsurance company in India in terms of gross premiums accepted in the fiscal year ended 31 March 2017 and accounted for approximately 60% of the premiums ceded by Indian insurers to reinsurers during the year, according to CRISIL Research. It is ranked as the 12th largest global reinsurer in 2016 and the 3rd largest Asian reinsurer in 2015, in terms of gross premiums accepted.
Four other state-run general insurance companies — New India Assurance, National Insurance, Oriental Insurance and United India Insurance — are also planning to raise funds from the stock market. New India has already received SEBI’s approval for its IPO and has appointed merchant bankers.
The GIC IPO comes close on the heels of two successful insurance offerings last month — ICICI Lombard General raising INR58 billion and SBI Life Insurance raising INR84 billion.