GIC Re shares fall almost 7% on stock market debut

New India Assurance (NIA), the largest general insurance company in India, will hit the capital markets on November 1 to raise an estimated Rs 10,000 crore through IPO, merchant banking sources said.

General Insurance Corporation of India is now trading at Rs 850.15, down by Rs 61.85 or 6.78% from its previous closing of Rs 912 on the BSE.

GIC Re shares opened 6.8% lower on the BSE at Rs850 apiece compared to the issue price of Rs912 which was the upper end of the price band of Rs855-912 per share.

The GIC Re IPO comprised a fresh issue of shares worth Rs 1,568 crore and an offer for sale worth Rs 9,804 crore by the government.

The government's stake sale in GIC Re is part of its record disinvestment target of Rs 72,500 crore for the current financial year to contain the fiscal deficit at 3.2% of the gross domestic product. The public offer will result in a 14.22% stake dilution.

According to its red herring prospectus (RHP), the company accounted for approximately 60% of the premiums ceded by Indian insurers to reinsurers during FY 2017. Last month, two insurance companies, SBI Life and ICICI Lombard, had raised Rs 8,400 crore and Rs 5,700 crore respectively through their IPOs. Axis Capital, Citigroup, Deutsche India, HSBC Securities and Kotak Mahindra Capital were the book running lead managers to the offer.

The company's market valuation stood at Rs 70,540.04 crore.

The company has exposure to domestic and worldwide business. The company's gross premium grew at a compounded annual growth rate (CAGR) of 48.65% from FY 15 to 17.

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