GIC Re Shares Plummet 5% as Government Unloads 6.8% Stake

Shares of General Insurance Corporation of India (GIC Re) are drawing attention on September 4 as the government plans to sell approximately 7% of its stake through the offer for sale (OFS) route. The government intends to divest 3.39% of its equity, with an option to sell an additional 3.39% as part of the green shoe option.

The OFS is open today for non-retail investors, while retail investors and GIC Re employees will be able to place bids on September 5. Subscriptions for equity shares can be made between 9:15 am and 3:30 pm on both days. The floor price for the OFS has been set at ₹395 per share.

The seller aims to offer up to 5.95 crore shares, each with a face value of ₹5, which represents 3.39% of the company's total paid-up equity capital, to non-retail investors on September 4, 2024 (T day).

The sale will continue on September 5, 2024 (T+1 day) for retail investors, employees, and any non-retail investors who choose to carry forward unallotted bids from the previous day, as mentioned in a BSE filing by GIC Re.

In addition to the base offer, there is an option to sell another 5.95 crore shares, which would increase the total offer to 11.90 crore shares, or 6.784% of the company's equity, should there be oversubscription.

Around 50,000 shares, representing 0.04% of the offered shares, are reserved for eligible employees of the company. GIC Re also stated that employees may bid for shares worth up to ₹5,00,000.

As of June 30, 2024, the government held an 85.78% stake in GIC Re, which is the largest reinsurer in the country. This announcement followed market close on September 3. Earlier that day, GIC Re shares closed 0.33% lower at ₹420.80 on the National Stock Exchange (NSE).

So far in 2024, GIC Re stock has risen by around 24%, surpassing Nifty’s return of 16%. Over the past 12 months, GIC Re shares have surged by 86%, compared to Nifty’s 29% gain during the same period.

GIC Re, a global provider of reinsurance solutions, is engaged in assuming part or all of the risk from insurance policies originally underwritten by other insurance companies. The company operates both domestically and internationally, providing reinsurance services to direct general insurance companies in India.

The company's business portfolio includes various classes, such as fire, motor, aviation, engineering, health, agriculture, marine hull, marine cargo, and life insurance, among others. Its health portfolio consists primarily of obligatory cessions, domestic proportional business, selective COVID-19 treaties, and government mass insurance schemes, along with business from its international branches. GIC Re also supports Indian life insurers through both treaty and facultative reinsurance agreements.