India's second-biggest IPO opens today: Should you invest in GIC's Rs 11,000 crore IPO?
India’s second-biggest IPO opens today: Should you invest in GIC’s Rs 11,000 crore IPO?

India’s third biggest initial public offering or IPO is opening today for subscription. State-run reinsurer General Insurance Corporation of India Limited or GIC Re will open its IPO to raise Rs 11,370 crore public money. Earlier this month, GIC Re issued a public notice in which it set a price range of 855-912 rupees per equity share. If fully subscribed at the upper end of the price band, this will be India’s third biggest IPO after Coal India and Reliance Power. In 2008, Reliance Power raised Rs 11,700 crore and two years later in 2010, Coal India raised Rs 15,200 crore through public offerings. This will also be the first time when India’s primary market will see public offering by a reinsurer player in the country.

In the state-owned GIC Re IPO , the government will sell 107.5 million shares, while the company will raise funds by selling 17.2 million new shares. Banks such as Citi, Axis Capital, Deutsche Bank, HSBC and Kotak are managing the GIC Re IPO. According to reports, the government’s move has come to meet the fiscal deficit target of 3.2 percent during the year by divesting some of its stakes in state-run companies.

GIC Re has net worth of close to Rs 50,000 crore and total assets of Rs 100,000 crore. The weighted average earning per share (EPS) for 2016-17 is at Rs 32 per share. The estimated market valuation of the corporation, as per the market, will be around Rs 1,00,000 crore. With today’s subscription offerings, GIC could emerge as the top…