The Indian government raised about 98 billion rupees ($1.5 billion) on Friday by selling some of its shares in General Insurance Corp of India (GIC Re), the nation's top reinsurer, in the country's biggest listing in seven years. The funds could be critical at a time when the government is looking to boost spending to help counter the slowest economic growth in more than three years, but has been constrained in part by lower-than-expected tax collections.
The government is aiming to raise 725 billion rupees by selling off some of its stakes in state-run companies in the year to March, including through the initial public offering (IPO) of GIC Re, which was set to close later on Friday having already attracted 1.35 times the number of shares on offer.
GIC Re's IPO brings the total money raised through IPOs this year to about $8 billion, not far from the record $8.65 billion in 2007, amid a market rally that has sent indexes to record highs. The NSE index closed up 0.7 percent after hitting its latest all-time high earlier in the session.
GIC Re, which had a 60 percent share in India's reinsurance market according to Crisil Research, is expected to benefit from growing premiums in India, which has relatively lower insurance penetration. The company is also expanding internationally. "We are not expecting any fancy listing gains on GIC Re just like in other recent insurance company IPOs, but the company is a good long-term buy," said Krishna Rana, an analyst with brokerage Sushil Finance.