Govt to Sell Up to 5% Stake in GIC via OFS at ₹352 per Share

The Government of India is set to divest a portion of its holdings in the General Insurance Corporation of India (GIC) through an Offer for Sale (OFS) starting June 16. This strategic move is part of the Centre's broader disinvestment roadmap to raise capital and meet fiscal targets.

Details of the GIC Offer for Sale

The Department of Investment and Public Asset Management (DIPAM) has announced that the OFS will open for institutional investors on Tuesday, June 16. Retail investors will be able to participate in the bidding process starting Wednesday.

According to DIPAM Secretary Arunish Chawla, the government intends to divest an initial 2% equity stake in GIC. However, a "green shoe option" is also available, which could allow the government to sell an additional 3% stake, bringing the total potential divestment to 5%.

The floor price for the OFS has been set at ₹352 per share. Based on the sale of more than 8.77 crore shares, the exchequer is expected to mobilize approximately ₹3,000 crore from this transaction.

Pricing and Market Context

The government's decision to set the floor price at ₹352 represents a discount of 9.36% compared to the closing market price of GIC shares. On Monday, GIC shares closed at ₹388.35 on the BSE, having gained 2.55% during the session.

By offering the shares at a discount, the government aims to attract significant participation from both institutional and retail segments, ensuring the liquidity and success of the OFS in a volatile market environment.

Disinvestment Momentum and Fiscal Targets

This GIC stake sale is a significant component of the government's aggressive disinvestment strategy for the current financial year. To date, the Centre has already mobilized ₹13,389 crore through various public sector undertakings (PSUs).

The breakdown of the funds raised so far includes:

The government is working toward an ambitious budgeted target of ₹80,000 crore from PSU disinvestment and asset monetisation during this fiscal year. The GIC sale serves as a vital stepping stone toward reaching this milestone, reflecting the ongoing push to optimize state-owned assets.

Key Takeaways