Two state owned general insurance companies to help government raise Rs. 15000 crores

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According to a couple of merchant banking sources, the government will be able to raise Rs. 15000 crores by taking two state-owned general insurance companies public.

At present, there are five general insurance companies owned by the government, out of which New India Assurance (NIA) and GIC Re will be up for IPO in a few weeks’ time.

By diluting its shares in the general insurance companies, the exchequer had anticipated raising about Rs. 11000 crores.

Given the current market run, the government can easily make Rs. 15000 crores by selling its stakes in the two general insurance companies. In fact, many experts believe the IPO would fetch more than Rs. 15000 crores.

The current government has some very ambitious divestment plans and expects a target of Rs. 72500 crores in the current financial year. The plan of listing the companies includes four non-life insurance companies and one Reinsurer Company.

As part of the IPO, NIA would be selling 2.4 crores shares, whereas the government will shell out 9.6 crores shares. In the case of GIC Re, the exchequer will sell 10.75 crores shares and the company would dilute about 1.7 crores shares.

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