India's largest life insurer LIC has put in a major bid for shares of the country's only state-owned reinsurer GIC Re whose three-day initial public offer closes today.
“LIC has made a substantial bid in the institutional portion of the book as a result of which the institutional portion is already oversubscribed,” a source told Mint.
The life insurer is reported to have put in a bid for shares of GIC Re worth INR70 billion (US$1.08 billion) to INR80 billion. While LIC Chairman VK Sharma reportedly confirmed that LIC had made a bid, he declined to give details.
GIC Re is looking to raise INR113.72 billion at the upper end of the price band of INR855-912 per share. The IPO comprises 17.2 million fresh equity shares and 107.5 million existing shares owned by the government. This offer would constitute 14.22% of the post-offer paid-up equity share capital of the company.
As of 5 pm yesterday, the IPO received bids for 111,622,448 shares against the total issue size of 124.7 million shares, according to data available with stock exchanges.
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.
Four other state-run general insurance companies — New India Assurance, National Insurance, Oriental Insurance and United India Insurance — are also planning to be listed.