The Narendra Modi government has started drawing up its divestment plan and is looking to insurance sector this time around starting with New India Assurance and General Insurance Corporation Reinsurance or GIC Re, sources privy to the developments told CNBC-TV18.
This divestment could take plan through an Offer for Sale or OFS route where the base issue is expected to be around 5 percent with a greenshoe option of up to 5 percent, said people familiar with the matter. As per the exchange filing, the government owns 85.44 percent in New India Assurance and 85.78 percent stake in GIC Re.
Sources suggested that bankers to the OFS issue have already been appointed and include names like SBI Capital, YES Securities, BOB Capital, IDBI Capital, Elara Capital and PNB Investment.
Any divestment in New India Assurance and GIC Re is likely to help the government comply with Sebi's minimum public shareholding norms along with helping it to raise funds.
Sebi's Minimum Public Shareholding norms require all listed companies in India to ensure that at least 25 percent of their equity shares are held by non-promoters (public).
The government would be presenting the union budget on July 5 and it remains to be seen what divestment target does it set for itself and how much would the divestment in New India Assurance and GIC Re help to achieve that divestment target.
First Published: Jul 2, 2019 11:28 AM IST