10% stake in GIC Re to be sold in FY25 by govt

THE CENTRE may sell up to 10 per cent stake in state-run General Insurance Corporation (GIC Re) in the current financial year, a senior official told FE. “GIC Re received a very good response from investors in the roadshows held recently to apprise potential investors of the company’s unique position in the Indian reinsurance market, and its strong growth potential,” the official added.

The official, however, said the government has no immediate plans to sell any more stake in Life Insurance Corporation (LIC), but added that it would explore the option “at appropriate times in small tranches.”

The company held investor outreach programmes in New York, Singapore, Hong Kong, Dubai and London between February 19 and March 1.

A 10 per cent stake in the company is worth about Rs 5,700 crore at the current market prices. The reinsurer’s share price closed at Rs 324.95 on Friday, down 1.87 per cent from the previous closing. Currently, the Centre owns 85.78 per cent of GIC Re and needs to reduce it to 75 per cent by August this year to meet the minimum public shareholding (MPS) of 25 per cent in the company. However, the company may get a one-year extension to meet MPS norms. “An extended period of one year to meet MPS norms is expected,” the official, quoted above said.

Depending on the market appetite, the government could sell around 10 per cent stake in one or in a couple of tranches in FY25, or latest by August next year.

Some of the state-run companies which met MPS norms have seen their share prices rise exponentially. For instance, after Hindustan Aeronautics Limited (HAL) met the MPS norm in March last year, its share price doubled.

GIC is the only Indian reinsurer, which provides support to direct insurers in India and receives obligatory cessions on every policy by domestic general insurers. In the roadshows, the GIC showcased its dominant position in the domestic market with a 67 per cent share gross reinsurance premium of $4.4 billion (FY23). The rest of the shares are with foreign reinsurance branches (FRBS).