General Insurance Corp's Rs 11,000 crore IPO gets oversubscribe by 1.36 times on Day 3; QIBs bid most

State-owned General Insurance Corporation on its final day of initial public offering (IPO) got oversubscribed by 1.36 times. 

On Day 3, the company received total bid of 16.93 crore equity share - oversubscribing by 1.36 times compared to 12.47 crore equity shares offered. 

During the first two day of its IPO issue, the company saw very tepid response. However, at the end of the final day, qualified institutional buyers (QIB) boosted the IPO towards oversubscription.

QIB bid over 10.30 crore equity shares on NSE, oversubscribing by 1.66 times compared to 6.23 crore equity shares fixed. 

Meanwhile on NSE, the Non-institutional individuals and retail individual investors (RII) were reluctant towards the IPO - as they saw subscription of just 11% and 16% respectively. 

Price band has been fixed at lower end of Rs 855 per share and upper end of Rs 912 per share.

On the valuation front, at upper price band of Rs 912, the issue was priced at a P/E of 25.5x on FY17 EPS and P/B of 4x on FY17 book value.

50% of the issue has been kept for qualified institutional buyers (QIB) for subscription, while 35% for retain individual investors (RII ) and remaining 15% for non-institutional individuals (NII).

The company planned to raise about Rs 11,370 crore from its IPO issue - which would be India's second-biggest public offer since Coal India's Rs 15,200 crore share sale in October 2010 and Reliance Power's Rs 10,123.2 crore share sale in January 2008.

Issue consists of an offer for sale (OFS) of 10.75 crore equity shares worth Rs 9,804 crore at higher price band and a fresh issue of 1.72 crore equity shares worth Rs 1,569 crore.

Government through this IPO plans to sell 12.26% stake in the company and the corporation itself is selling 1.96% stake. After the issue, promoters holding in GIC Re is expected to drop by nearly 86%.

Payal Pandya and Siddhartha Khemka, analysts at Centrum Research giving similar opinions said, "Given the full valuation and size of the issue (one of the biggest IPOs in last few years), the stock is expected to give returns only in the long term."

Post IPO, GIC Re's market capitalisation is projected to be between Rs 75,001 crore – 80,001 crore, respectively.