GIC Re's $1.7 billion IPO opens tomorrow

Moneycontrol News

General Insurance Corporation of India (GIC Re)’s USD 1.7 billion (Rs 11,370 crore) initial public offering (IPO) opens on October 11 and closes on October 13. The price band for the issue is Rs 855 to Rs 912.

The insurer has been valued at Rs 80,000 crore (considering the upper band for the issue) for its upcoming IPO. This is the third largest IPO after Coal India (2010) and Reliance Power (2008).

The IPO consists of a primary issue of 17.20 million equity shares by GIC Re and offer-for-sale of 107.50 million equity shares by the government. GIC Re is a government-owned reinsurance company. It will be the first reinsurance company to be listed on the exchanges.

Currently, ICICI Prudential Life Insurance, SBI Life Insurance and ICICI Lombard General Insurance are the only listed insurance players in the country.

The reinsurer had a gross premium of Rs 33,741 crore and a profit after tax of Rs 3,141 crore in FY17. Bankers said that the huge market share and the fact that they did not have any major competitor in India has led to these valuations.

A discount of Rs 45 on the offer price is being offered to retail individual bidders and to eligible employees bidding in the employee reservation portion.

GIC Re is looking to utilise the net proceeds of the fresh issue towards augmenting its capital base to support the growth of the business and to maintain current solvency levels as well as general corporate purposes.

Prior to this, SBI Life's USD 1.3 billion (Rs 8400 crore) initial public offering (IPO) was touted as the largest ever insurance IPO.