News eDaily16 Oct 2017

India:Institutional investors drive GIC Re IPO subscription rate to 1.38 times

16 Oct 2017

State-owned reinsurer GIC Re saw its initial public offer subscribed 1.38 times at the close of the fundraising exercise last Friday.

GIC Re received bids for 171,863,136 shares for its offer of 124,700,000 shares, on the back of a strong support from QIBs (qualified institutional buyers).

The quota for QIBs was subscribed 2.25 times. The retail portion was, however, subscribed only 0.63 times. The quota for non-institutional investors saw a subscription of just 0.22 times.

The government, which had a 100% ownership of the reinsurer, sold 107.5 million shares in the IPO, while the company sold 17.2 million new shares, for a total IPO size of around  INR113.7 billion (US$1.75 billion). This was the country’s biggest listing in seven years. The total offer of 124.7 million shares constitutes 14.2% of the post-IPO paid-up share capital.

The IPO, which opened on 11 October, was priced at INR855-912 per share. Retail investors and employees were offered a discount of INR45 per share.

The view in the market is that the IPO was priced at a high premium, leaving little room for retail investors to make gains. Institutional investors' demand was boosted by the country's biggest life insurer, the state-owned LIC, which alone had put in a bid that was worth between INR45 billion to INR60 billion, reported The Economic Times citing market players.

Shares of GIC Re are set to debut in the stock market on 25 October.

GIC Re, which had a 60% share in India’s reinsurance market according to Crisil Research, is expected to benefit from growing premiums in India, which has relatively lower insurance penetration. The company is also expanding internationally.


 

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