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LIC makes Rs8,000 crore bid in GIC Re IPO

12 October 2017

As of 5pm, the portion of shares reserved for institutional investors in the GIC Re IPO was subscribed 1.55 times, while the overall IPO was subscribed 80%, according to data from stock exchanges.

Citigroup Global Markets India, Axis Capital, Deutsche Equities India, HSBC Securities and Capital Markets (India), and Kotak Mahindra Capital Company are merchant bankers managing GIC's IPO.

The issue received bids for 8,88,39,152 shares as against 12,47,00,000 shares on offer. The issue received bids for 1.20 crore shares as against an offer for 52.75 lakh shares.

If fully subscribed at the upper end of the price band, this will be the largest public float by a domestic company after the October 2010 offer by Coal India which had raised Rs 15,000 crore. The segment contributed 29 per cent of total gross premium collected in FY2017 against mere 4 per cent in FY2014. The companys IPO committee of the Board of Directors in consultation with the book running lead managers to the offer has finalised revised allocation of 7,89,120 shares to anchor investors at a price of Rs 1,650 per share, the notice said. Post this issue promoter holding in the company will drop to almost 86 per cent.

Recommending subscription, Geojit added, "We believe the issue is attractively priced considering its strong financial track record, healthy balance sheet and bright prospects of the overall general insurance sector in the future". The company provides reinsurance across key business lines including fire, marine, motor, engineering, agriculture, aviation, health, liability, credit and finance.

GIC attained a very healthy solvency ratio of 2.4x in FY17 compared to the IRDAI prescribed control level of 1.5x.

Payal Pandya and Siddhartha Khemka, analysts at Centrum Research giving similar opinions said, "Given the full valuation and size of the issue (one of the biggest IPOs in last few years), the stock is expected to give returns only in the long term".

GIC Re, the 12th largest reinsurance firm globally by gross premium written, joins a growing list of Indian insurance firms that have either firmed up plans for a public offering or have already gone public. As of June 30, 2017, GIC Re had an investment book worth Rs 41,930 crore whose market value was Rs 73,903 crore.

LIC makes Rs8,000 crore bid in GIC Re IPO