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New India Assurance, GIC set to file for IPO in next three weeks

LiveMint logoLiveMint 27-07-2017 Swaraj Singh Dhanjal

Mumbai: State-owned insurance firms General Insurance Corp. of India (GIC) and New India Assurance Co. Ltd are set to file their initial share-sale prospectuses in the next two to three weeks, said two people aware of the development.

“Both insurance companies are in the final stages of finishing work on their respective draft red herring prospectus (DRHP) and they plan to file the documents within the next couple of weeks,” said one of the two persons cited above, requesting anonymity as he is not authorized to speak with the media.

A DRHP, or draft share-sale document, provides information about a company, its business and promoters, how it intends to use the proceeds of an IPO, and the potential risks it faces.

The GIC and New India Assurance initial public offerings (IPOs) are likely to see the government divest at least a 10% stake in each of the insurers, the person cited above said. “The quantum of government stake to be sold through the IPOs is still being discussed and it will be finalized in the next few days. The government could sell between 10% and 15% stake,” he added.

In April, Mint was the first to report that the two state-owned insurance firms had appointed investment banks to start work on their IPOs.

The two IPOs together, the largest public sector offerings after Coal India Ltd’s record initial share sale in 2010, will see the government raise more than Rs10,000 crore by selling its shares to the public, Mint reported.

GIC has appointed Citibank, Axis Capital, Kotak Mahindra Capital Co Ltd, Deutsche Bank and HSBC to manage its IPO.

New India Assurance has appointed Axis Capital, Kotak Mahindra Capital, Yes Bank, IDFC Capital and Nomura.

According to the second person cited above, the two share sales are planned for launch in October or November. He too requested anonymity.

Emails sent to spokespersons at GIC did not elicit any response.

Calls and text messages sent to G. Srinivasan, chairman and managing director at New India Assurance, too went unanswered.

The filing of IPO documents by the state-owned insurance companies comes at a time when the Indian primary markets are expected to see a flurry of insurance IPOs.

Last week, SBI Life Insurance Co. Ltd filed the draft red herring prospectus for its IPO. The issue will see State Bank of India and BNP Paribas sell 80 million and 40 million shares respectively, amounting to a combined 12% stake. The SBI Life IPO is expected to raise around Rs6,000-7,000 crore.

On 14 July, ICICI Lombard General Insurance Co. Ltd, the non-life insurance joint venture of ICICI Bank Ltd and Fairfax Financial Holdings Ltd, filed its DRHP.

ICICI Lombard, founded in 2001, is the first non-life insurance company to file for a public offering. The share sale will see the dilution of an over 19% stake. ICICI Bank is selling a 7.15% stake, while Fairfax is selling 12.27%.

Last year, ICICI Prudential Life Insurance Co. Ltd became the first insurance company in the ICICI stable to launch an IPO.

The initial share sales of GIC and New India Assurance are part of the government’s aggressive divestment plan, which has seen the department of investment and public asset management appoint bankers to sell government stakes across over a dozen public sector enterprises through various routes such as IPOs, offer for sale and strategic sales.

The list of companies where the government is looking to pare its stake include railway subsidiaries Rail Vikas Nigam Ltd, Ircon International Ltd, Indian Railway Finance Corp. Ltd, Indian Railway Catering and Tourism Corp. Ltd (IRCTC) and RITES Ltd.

Other state-owned firms that have been cleared for IPOs include three defence ministry enterprises—Bharat Dynamics Ltd, Garden Reach Shipbuilders and Engineers Ltd and Mazagon Dock Shipbuilders Ltd—MSTC Ltd and Mishra Dhatu Nigam Ltd, controlled by the steel ministry, and North Eastern Electric Power Corp. Ltd, which is under the power ministry.

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