GIC Re offer for sale subscribed 3.72 times on day 1; govt to offer additional 3% stake

The Indian government's offer for sale (OFS) in General Insurance Corporation of India (GIC Re) received a strong response from investors on Tuesday, the first day of bidding, with the issue subscribed 3.72 times.

Following the strong response, the Centre has decided to exercise the entire 3% greenshoe option, which allows it to sell additional shares beyond the original issue size to meet high investor demand, Arunish Chawla, secretary at the Department of Investment and Public Asset Management (Dipam), posted on X.

The OFS was open only to non-retail investors on day one. Retail investors and eligible employees will be able to participate on Wednesday. The OFS route allows promoters to dilute holdings in listed companies through a transparent, exchange-based sale.

The government currently holds a 82.4% stake in GIC, amounting to 1.45 billion shares. Based on Tuesday's closing price of ₹388.35, the government’s holding is worth about ₹56,139 crore and the total market cap is ₹68,132 crore, according to the Dipam portal. The OFS floor price of ₹352 represents a discount of about 9.4% to the closing market price. The company is a key player in India's insurance sector as the domestic reinsurer and also has a presence across several international markets.

The stake sale is part of the government's broader disinvestment programme aimed at raising resources while improving public shareholding in state-owned enterprises. At a floor price of ₹352 per share, the government is expected to raise about ₹1,230 crore from the base offer and up to ₹3,075 crore if the entire 5% stake is sold. Proceeds from the transaction will accrue to the Centre and contribute to its disinvestment receipts for FY27.

Making hay

Experts said the government appears to be accelerating its disinvestment programme to boost non-debt capital receipts at a time when market valuations remain favourable, although not at peak levels.

Ranen Banerjee, partner and leader, economic advisory at PwC India, said, "The government is clearly in overdrive to mobilise non-debt capital receipts while market conditions remain supportive. Preparatory work for several stake sales has been underway for the past two fiscal years, but there was little urgency to push transactions aggressively as tax revenues remained robust.”

“Given the likely softness in tax revenues in FY27 both on the direct and indirect taxes front, the government is taking early action on the divestment and monetisation fronts. It will help the government keep to its borrowing schedule and not borrow more than planned in the early part of the fiscal year to keep the pressure on the bond yields in check,” Banerjee added.

The government has already mobilized about ₹13,389 crore in FY27 through minority stake sales in public sector enterprises. The receipts include ₹5,542 crore from a 2% OFS in Coal India Limited, ₹4,357 crore from a 6.01% OFS in NHPC Limited, ₹2,266 crore from an 8.08% OFS in Central Bank of India, and ₹1,224 crore from a 2.73% OFS in NLC India Limited.