India to sell at least up to 35.1M General Insurance Corp. shares

India is set to divest a 6.78% stake in the state-owned General Insurance Corporation of India (GIC Re), valued at approximately ₹4,700 crore, marking the first such opportunity for non-retail investors since the reinsurer's 2017 offer-for-sale (OFS) listing. The government will sell 3.39% of its shares, with an option to offer an additional 3.39% through a "green shoe option," according to the Department of Investment and Public Asset Management (DIPAM). The OFS floor price is expected to be set at around ₹395 per share, a 6% discount from the current market price of ₹420.8.

The government currently holds 85.78% of GIC Re, and the divestment aims to bring the public shareholding up to the minimum threshold of 25%. This move aligns with the strategy used during the Life Insurance Corporation’s (LIC) initial public offering (IPO), where the government sold a portion of its stake to facilitate inclusion in index funds. The sale is expected to open for non-retail investors on Wednesday, with retail investors and GIC Re employees able to place bids starting Thursday.

The General Insurance Corporation of India, established in 1972, operates as the sole reinsurance company in India and manages the general insurance business through four subsidiaries: National Insurance Company Limited, The New India Assurance Company Limited, The Oriental Insurance Company Limited, and United India Insurance Company Limited. Financially, GIC Re reported a consolidated net profit of ₹6,577 crore for the fiscal year ending March 2023, with a return on equity (ROE) of 19.18%. The company has demonstrated strong operating performance in recent years, with a consistent increase in net profit and earnings per share (EPS).

The government's decision to divest a portion of its stake in GIC Re is part of broader disinvestment goals outlined in the Union Budget for FY25, which aims to raise ₹50,000 crore in capital receipts from disinvestment. This move is expected to enhance market participation and potentially improve the company's governance and operational efficiency.