Govt may get Rs. 15,000cr from NIA, GIC Re IPOs
What's the story
The NDA government intends to rake around Rs. 11,000 crore by selling shares of four state-owned non-life insurers and the national reinsurer, according to its disinvestment plans for the current fiscal. Reports say that the IPO of New India Assurance (NIA) and GIC Re, expected to take place within the next few weeks, would easily give the exchequer over Rs. 15,000 crore. Here's more.
Disinvestment
The disinvestment plan
The Centre plans on raising Rs. 72,500 crore via divesting stake in central public sector enterprises (CPSEs) in 2017-18. This target is 58% higher than the Rs. 46,247 crore that was accrued in 2016-17. As per the plan, PSU disinvestments would raise Rs. 46,500 crore, Rs 15,000 crore will come from strategic disinvestment and Rs 11,000 crore, from the listing of general insurance companies.
GIC Re
General Insurance Corporation of India
The Centre will sell 10.75 crore GIC Re shares and the national reinsurer itself will, probably, sell 1.7 crore shares via IPO route. Therefore, in total 12.4 crore shares or 14.22% of the company's post-issue share capital will be up for grabs. In FY2016-17 its net worth was Rs. 47,983 crore and profit-after-tax (PAT) was Rs. 3,127 crore, up 9.8% from the previous year.
Bourses
Highly sought after
The 44-year old corporation, after listing, will join the elite list of India's top ten most valued PSU companies. Its market valuation should be around Rs. 1,00,000 crore. SBI, Indian Oil, ONGC, CIL, NTPC, Power Grid and HPCL are the current heavyweights in bourses. GIC Re, the first re-insurance player set to debut in the list, will be ranked depending on its listing price.
NIA
New India Assurance
In case of India's largest public sector general insurance company, New India Assurance, the NDA government plans on selling 9.6 crore shares. There will also be a fresh issue of 2.4 crore shares by NIA in this IPO. A total of 12 crore shares, which is around 14.56% of New India Assurance's post-issue share capital, will be made available in the market during IPO.
IPO
A profitable buy
NIA's April-June quarter net profit stood at Rs. 499.41 crore, more than double of Rs. 218 crore accrued last year. Its gross premium was up by 17% to Rs. 6,132 crore from the Rs. 5,263 crore that was noticed a year ago. The company's incurred claim ratio also came down to 87% from the previous year's 89%.