GET Stock QuotesNews18 APP
News18 English
»
2-min read

Govt Raises $1.75 Billion in IPO of Reinsurer GIC Re

The funds could be critical at a time when the government is looking to boost spending to help counter the slowest economic growth in more than three years, but has been constrained in part by lower-than-expected tax collections.

Reuters

Updated:October 13, 2017, 6:09 PM IST
facebookTwittergoogleskypewhatsapp
Govt Raises $1.75 Billion in IPO of Reinsurer GIC Re
An aircraft flies over a billboard of General Insurance Corporation of India in Mumbai on October 13, 2017. (Photo: Reuters/Shailesh Andrade)
Loading...
Mumbai: The government raised 113.7 billion rupees ($1.75 billion) on Friday by selling some of its shares in General Insurance Corp of India (GIC Re), the nation's top reinsurer, in the country's biggest listing in seven years.

The funds could be critical at a time when the government is looking to boost spending to help counter the slowest economic growth in more than three years, but has been constrained in part by lower-than-expected tax collections.

The government is aiming to raise 725 billion rupees by selling off some of its stakes in state-run companies in the year to March, including through the initial public offering (IPO) of GIC Re, which was set to close later on Friday having already attracted 1.35 times the number of shares on offer.

GIC Re's IPO brings the total money raised through IPOs this year to more than $6 billion, not far from the record $8.65 billion in 2007, amid a market rally that has sent indexes to record highs. The NSE index closed up 0.7 percent after hitting its latest all-time high earlier in the session. [.BO]

GIC Re, which had a 60 percent 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.

"We are not expecting any fancy listing gains on GIC Re just like in other recent insurance company IPOs, but the company is a good long-term buy," said Krishna Rana, an analyst with brokerage Sushil Finance.

"Insurance is a relatively new sector and the knowledge about this sector is still quite low, so retail interest in these IPOs also has been lower," she added.

The government, which currently fully owns the reinsurer, was selling 107.5 million shares in the IPO, while the company was selling 17.2 million new shares.

The total offer of 124.7 million shares constitutes 14.2 percent of the post-offer paid up share capital.

Crisil estimates reinsurance premiums in India will grow at an average annual rate of 11-14 percent over five years to reach 700 billion rupees by March 2022.

Most analysts had recommended subscribing to the IPO, citing its reasonable valuations, although recent lacklustre listings by two big insurance companies had dampened sentiment.

GIC Re is set to debut in markets on Oct. 25.

Citi, Axis Capital, Deutsche Bank, HSBC and Kotak were the banks managing the GIC Re IPO, which was the biggest since Coal India's 2010 share sale that raised 155 billion rupees.

($1 = 64.9025 Indian rupees)
Read full article
Loading...
Next Story
Next Story

Also Watch

facebookTwittergoogleskypewhatsapp
Most Active
Company Price Change %Gain
Yes Bank 192.75 -5.88
Indiabulls Hsg 704.55 -3.99
ICICI Bank 356.15 -1.72
Jet Airways 309.45 -4.11
Reliance 1,140.00 -0.87
Company Price Change %Gain
Yes Bank 193.30 -5.73
Varun Beverages 783.25 0.14
Indiabulls Hsg 704.85 -4.13
Jet Airways 309.85 -4.07
Dewan Housing 221.95 -4.39
Top Gainers
Company Price Change %Gain
GAIL 344.55 2.94
IndusInd Bank 1,564.00 1.69
Adani Ports 354.70 1.18
M&M 787.80 0.83
Asian Paints 1,318.20 0.46
Company Price Change %Gain
IndusInd Bank 1,563.20 1.66
Adani Ports 354.95 1.47
M&M 788.00 0.98
Asian Paints 1,316.00 0.31
ITC 284.50 0.21
Top Losers
Company Price Change %Gain
Yes Bank 192.75 -5.88
Hindalco 223.45 -4.69
Indiabulls Hsg 704.70 -3.97
Tech Mahindra 708.60 -3.27
Dr Reddys Labs 2,450.00 -3.11
Company Price Change %Gain
Yes Bank 193.30 -5.73
Vedanta 205.20 -2.84
Tata Steel 566.90 -2.63
ICICI Bank 356.15 -1.75
Sun Pharma 523.70 -1.29

Live TV

Loading...
Loading...