GIC Re’s mega IPO subscribed 80% on Day 1; QIB demand strong

NEW DELHI: The initial public offer ( IPO) of General Insurance Corporation of India ( GIC Re) saw smooth sailing as the issue got subscribed 79 per cent on the first day of the bidding process on Wednesday.

At Rs 11,370-crore, the issue would be India's third biggest after Coal India's Rs 15,200 crore and Reliance Power's Rs 11,700 crore issues.

The issue received bids for 9,93,04,384 shares as against 12,47,00,000 shares on offer.

Qualified Institutional buyers quota was subscribed 1.56 times, retail was subscribed nearly 6 per cent, while other segments saw negligible subscription till 5 pm on Wednesday.

The reinsurer is selling 12,47,00,000 shares in Rs 855-912 price band in the IPO that will conclude on October13. The offer would constitute 14.22 per cent of the post-offer paid-up equity share capital.

The company is giving a discount of Rs 45 per share to retail investors and eligible employees. Investors can bid for a minimum of 16 shares and in multiples of 16 thereafter.

What analysts say
Jimeet Modi, CEO at Samco Securities said that GIC being a monopoly business should be subscribed to, given that the issue is fairly priced.

"The stock must be held with ultra long term perspective for superior returns," Modi said.

"If you look at general finance sector, its valuations have steadily gone up over the last 5 to 10 years, as the market has figured out how to value such a sector. There is a business model. How do it expands, what are the cost, the capital requirement and other things -- these are all testing phases. Only one or two listings have happened in the insurance space so far. So it is in a discovery phase for the market," said Sunil Subramaniam, CEO, Sundaram Mutual Fund.

"We have some more listings coming in terms of the insurance companies GIC and New India. So there will be supply and you will get what you call a price realisation," Subramaniam said.

Alice said that his company was seeing investor interest, both from foreign markets and from domestic markets.

"Given the fact that GIC is in a very unique space as a reinsurer, with a dominant market share with a global book, firm financial balance sheet, diversified investment portfolio and a rating A minus, we are very confident that there is an investor appetite and the markets will respond very well to the issue," he said.