GIC Re slips 5% after Govt plans to dilute 6.78% stake to raise Rs 4,700 cr

GIC Re share slips in trade: General Insurance Corporation of India (GIC Re) shares were trading lower on Wednesday, September 4, 2024. The GIC Re stock slipped as much as 5.37 per cent to hit an intraday low of Rs 398.60 per share. 

The decline in GIC Re’s share price follows the central government’s announcement of its plan to reduce its stake in the company by 6.78 percent to raise about Rs 4,700 crore. This will mark the first stake sale since GIC Re's listing in 2017.

According to a post on social media platform X by the Secretary of the Department of Investment and Public Asset Management, retail investors and GIC Re employees will be able to place their bids on Thursday. The government will divest 3.39 percent of its equity, with an additional 3.39 percent available as a green shoe option. 

 

The Offer for Sale (OFS) for non-retail investors will commence on Wednesday. The floor price for the OFS is anticipated to be around Rs 395 per share, which is roughly a 6 percent discount to the current market price of Rs 420.8, after a 1.4 percent drop on Tuesday.

Currently, the government holds an 85.78 percent stake in GIC Re. This move is similar to the strategy used during LIC’s initial public offering (IPO), where the government divested 3.5 percent of its stake and planned to sell an additional 1.5 percent to facilitate the insurer’s inclusion in index funds.

The General Insurance Corporation of India is a public sector reinsurance company based in Mumbai, India. Established in 1972 under the Companies Act of 1956, GIC Re's primary role is to oversee and manage the general insurance industry in India. 

The corporation also provides directives to acquiring companies and offers guidance on investment strategies. GIC Re’s shares are listed on both the National Stock Exchange of India (NSE) and BSE Limited. 

Until late 2016, GIC Re was the sole nationalised reinsurance provider in India, a status it held until the insurance market was opened to foreign reinsurance companies.

The market capitalisation of GIC Re is Rs 70,702.32 crore, according to Bombay Stock Exchange (BSE).

The 52-week high of GIC Re stock is Rs 467 per share while its 52-week low is Rs 202.45 per share. 

At 9:48 AM, shares of GIC Re were trading 4.40 per cent lower at Rs 402.70 per share. In comparison, BSE Sensex was trading 0.65 per cent to 82,021.64 levels.