GIC files draft prospectus for INR10,000 crore IPO


The General Insurance Corporation of India (GIC) has filed draft red herring prospectus (DRHP) for its initial public offering (IPO) with the Securities and Exchange Board of India (SEBI). The state-owned reinsurance company plans to offload 14.22% shares, according to the draft prospectus. GIC IPO will be managed by Citigroup, Axis Capital, Deutsche Bank, HSBC and Kotak Mahindra Capital Company.

According to reports, the IPO may raise anywhere between INR6,000-10,000 crore (INR60-100 billion). As of now, the company is fully-owned by the government.

GIC IPO = Fresh + OFS

The IPO will involve sale of 124,700,000 shares in a price band which will be decided at a later stage. This will involve fresh issue of 17,200,000 shares which will be used for augmenting the capital base of the company to support the growth of the business and to maintain current solvency levels and general corporate purposes.

The government plans to sell 107,500,000 shares through an Offer For Sale (OFS). The company will not get proceeds from the OFS component.

The IPO of GIC is part of the government’s divestment drive which also includes move to divest stakes in five general insurance companies.

GIC IPO to be among the biggest

Going by the reports, the IPO will be one of the biggest public offers in India. At INR10,000 crore, it will be the second largest IPO in the country. Coal India IPO remains the biggest IPO in India, raising INR15,199 crore in 2010 (here is the list of biggest IPOs in India). Clearly the government is aiming big with GIC IPO, although NSE is another contender with plans to raise INR10,000 crore.

Lots of insurance players are tapping the primary market. Last year, it was ICICI Prudential which became the first insurance company to get listed on stock exchanges in India and ICICI Bank now plans to list its general insurance arm ICICI Lombard. SBI Life Insurance has also filed draft prospectus to SEBI for its IPO. Canara HSBC Oriental Bank of Commerce Life Insurance, Aviva India Life Insurance and Max Bupa Health Insurance are also known to be preparing for their public listings.


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