“The government has received good feedback in investor roadshows for GIC, and is open to sell its 10 per cent stake in tranches depending on its shares’ value,” the official said. The sale of 10 per cent stake in GIC would be done over a period of time, the official said, garnering about Rs 57 billion ($683 million), as per the closing price on Friday
New Delhi /Mumbai:
The Indian government is open to a minority stake sale in GIC Re and Life Insurance Corporation of India (LIC) in financial year 2024/25 after assessing investor appetite, a government source told Reuters on Friday.
“The government has received good feedback in investor roadshows for GIC, and is open to sell its 10% stake in tranches depending on its shares’ value,” the official said.
The sale of 10per cent stake in GIC would be done over a period of time, the official said, garnering about Rs 57 billion ($683 million), as per the closing price on Friday.
The government had kick-started the process for additional stake sale in General Insurance Corporation (GIC Re), with roadshows in key global financial hubs including New York, Singapore, Hong Kong, Dubai and London in Feb.
The roadshows led by the Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Pandey and participated M P Tangirala, additional secretary, department of financial services(DFS) and senior officials of GIC Re including N Ramaswamy, chairman, GIC Re.
“The response in the international roadshow was very encouraging. We had gone for a non-deal roadshow, though, we met up with big investors and analysts. Investors have started tracking our stock. A lot of investors have met me in my office and told me they want to buy large chunk GIC Re shares but market doesn’t have liquidity,” said Ramaswamy.
Any kind of offer for sale will add liquidity to the market. Even a lot of institutional investors, including mutual funds have already bought GIC Re’s shares, added Ramaswamy.
A similar non-deal roadshows for Life Insurance Corporation were done by officials from the ministry of finance disinvestment department, along with LIC management including chairman Siddarth Mohanty, across various countries, including the United States last year.
“There is no proposal right now to disinvest, but whenever we do it, we may look at small tranches,” the ministry of finance official said.
Shares of GIC have risen about 45 per cent in the last six months.
For LIC, the government plans to stick to its target of offloading 10 per cent stake over 7 years and 25 per cent over 10 years since the listing in 2022, the source said.
However, LIC stakes would be sold in “small” tranches depending on the insurer’s stock performance and gauging investor appetite, the source said. Shares of country’s largest insurer have jumped 58 per cent in the last six months and closed at Rs 973 on Friday.
In LIC’s IPO, the government had sold 3.5per cent stake in the company, and had planned to offload another 1.5 per cent for the insurer’s inclusion in index funds.
“Any stake sale in LIC will be done in small tranches considering the large size of the offer,” the official said.
A sale of 1.5 per cent stake in LIC can help the government garner about Rs 92 billion , as per stock’s closing price on Friday.
An email sent to India’s finance ministry did not elicit an immediate response.
With inputs from Reuters