What Is The GIC OFS?
As per the Department of Investment and Public Asset Management (DIPAM), the government will sell up to 5% stake in GIC at a floor price of ₹352 per share. The floor price is at an 8.5% discount to the stock’s closing price on Monday.
The base plan is to offload 2% of the company’s outstanding equity, followed by a greenshoe option to sell an additional 3% stake.GIC’s OFS opens for non-retail investors on Tuesday and for retail investors on Wednesday.
As per the March quarter shareholding pattern shared on the BSE, the government holds a 82.4% stake in GIC, which is above the mandated minimum public shareholding norms of 75%.
Among the public shareholders, Mutual Funds own a 1.49% stake, while Life Insurance Corporation of India has a 9.8% stake in the company.As many as 2.06 lakh retail shareholders, or those with authorized share capital of up to ₹2 lakh, had a 1.4% stake.
Government’s Disinvestment Drive
The government’s disinvestment initiatives so far since May 21 have received a healthy response from both institutional and retail investors alike. Most of their OFS floor prices have been fixed at a healthy discount to their previous day’s closing.
In all the OFS’ announced so far this year, the government has managed to exercise the greenshoe option as a result of the healthy demand.
Through the four completed OFS’ so far, the government has managed to raise ₹13,389 crore. In case the government does manage to sell the entire 5% stake in GIC through this OFS, it could mop up another ₹3,087 crore (based on the floor price), taking the total tally past the ₹16,000 crore mark.
| Company | Funds Raised (Approx, ₹ Crore) |
| Coal India | 5,542 |
| NHPC | 4,357 |
| Central Bank of India | 2,266 |
| NLC India | 1,223 |
If one adds the monetisation receipts, the total mop up currently stands at ₹21,732 crore , which is 27% of the fully year target of ₹80,000 crore. Sources indicate that at the current pace, the government is likely to exceed the combined ₹80,000 crore target set for the current financial year.
In the budget the government’s disinvestment and monetisation receipts fall under ‘Miscellaneous Capital Receipts’ which are described as including “receipts on account of management of equity investments and public assets through various mechanisms”.
