The Finance Ministry is planning to raise INR47bn ($797m) by divesting a 6.78% stake in listed General Insurance Corporation of India (GIC) through an Offer for Sale (OFS).
This comprises 3.39% of the company’s equity with an additional 3.39% as a green shoe option. The total number of shares on offer is 119m, that is, the base offer plus green shoe shares. The floor price for the OFS is set at INR395 per share.
The stake sale, for the first time since the listing of the reinsurance company in 2017 through the OFS route, began yesterday for non-retail investors. The offer size for institutional investors was 53.56m of base offer shares and the greenshoe shares of 53.56m, adding to 107.1m shares.
The government's OFS was fully subscribed just before the close of market hours yesterday. The OFS received bids from non-retail investors for 58.1m shares as of 3.30 pm, the closing time for trading. The amount raised was around INR23m. Most bids were close to the floor price, according to stock exchange data.
The 58.1m shares represented 108.49% of the 53.5m shares reserved for institutional investors, according to the BSE data. The bids received were for around half of the total number of shares on offer.
The government said in a statement that it would exercise the oversubscription option for 5.05m shares, representing 0.288% of the total shares of the company. This supplements the base offer of 59.5m shares. Accordingly, the total offer size will be up to 64.6m shares representing 3.68% of the total capital, of which 6.46m i.e. 10% of the offer would be reserved for allocation to retail Investors today.
Retail investors and GIC employees can bid today. Retail investors will be offered 10% of the total shares on offer while 0.4% of the shares (50,000 shares) will be offered to employees.
In an interview earlier this week with Business Standard, GIC Re chairman and managing director Ramaswamy Narayanan said that GIC Re would have to meet the minimum public shareholding of 25%. “Currently, it is about 14%,” he said as the government owned an 85.78% stake in GIC Re before the OFS. The government will have to make further divestments to meet the 25% minimum public shareholding requirement.