“The Board has taken a view to list the shares and raise around Rs 1,500 crore. This is the first step and not the final step. The owner — central government — has to take the final call on the matter,” the officials told on the condition of anonymity.
“We have not decided on the share capital and the premium at which the shares are to be listed,” they added.
Presenting the 2016-17 budget, Finance Minister Arun Jaitley said “Public shareholding in government owned companies is a means of ensuring higher levels of transparency and accountability. To promote this objective, the general insurance companies owned by the government will be listed in the stock exchanges.”
The central government owns seven general insurers — GIC Re, New India Assurance, National Insurance Company, Oriental Insurance Company, United India Insurance Company, Export Credit Guarantee Corporation and Agriculture Insurance Company of India.
“Insurance Amendment Act 2015 amended General Insurance Business Nationalisation Act and introduced a new section 10B providing that GIC and the public sector general insurers may raise their capital for increasing their business in rural and social sectors, to meet solvency margin and such other purposes as the Central Government may empower,” K.K. Srinivasan, former member, Insurance Regulatory and Development Authority of India (IRDAI), had earlier told.
He said the amendment also clarified that the shareholding of the central government shall not be less than 51% anytime, thus setting the stage for partial divestment of GIC and other general insurers.
Srinivasan said, New India and United India may have relatively better valuations than Oriental, National and others, Srinivasan said.
According to reports, the board of New India has also given its nod for listing its shares