The General Insurance Corporation of India (GIC) will take its cue from the Unit Trust of India (UTI) on the open offer made by Reliance Industries for power major BSES.
"UTI's point of view will be very important as they have a lot of experience in trading in the market. The final stand will, however, be determined by GIC based on how profitable it is for its policy holders," said D Sengupta, chairman of GIC.
General Insurance Corporation has experience in selling shares as it picks up a stake in various companies through market operations.
Unit Trust of India, a state-owned mutual fund, has much greater experience on this issue.
The financial institutions had earlier indicated that a final decision to subscribing to the open offer will be taken towards the closing stages of the offer
period. The three financial institution Life Insurance Corporation of India, General Insurance Corporation and Unit Trust of India hold about 35 per cent in BSES.
They hold the key to the success of the open offer of 20 per cent in BSES made by RIL and its subsidiary Reliance Power Ventures.
All three companies have approximately equal stakes in BSES. The floating stock in the company is only 13 per cent.
Reliance Industries and RPVL have made an open offer for the 20 per cent stake in BSES at Rs 234 per share.
If the open offer goes through, the Reliance group will have to fork out Rs 650 crore.
This will also consolidate its position as the single largest shareholder. It holds about 14.8 per cent now.
The open offer had to be made under the takeover guidelines issued by the Securities and Exchange Board of India (SEBI) which stipulate that once a company's holding in another crosses 15 per cent it has to make an open offer fro another 20 per cent.
The price offered by Reliance is universally perceived as low as it is at a discount to the market price.
