NEW DELHI, Jan 22: State-owned GIC and New India Assurance may be the first ones to hit the capital market with the government giving the go-ahead for listing of five general insurance companies.
Both the companies have already obtained approval from their respective boards for listing of their shares through public offer.
According to sources, companies after finalising the listing process, extent of stake dilution and other aspects have to seek approval from the Finance Ministry before hitting the market.
Since the procedure and process are time consuming, it highly unlikely that any of the companies can go for listing during this fiscal, sources said, adding, listing most likely will happen next fiscal depending on the market condition.
The country’s largest non-life insurer, New India Assurance’ profit stood at Rs 514 crore in the first half of the current fiscal.
Meanwhile, Finance Ministry has asked two public sector general insurance companies — Oriental Insurance and United India — to improve their finances so that they could tap the capital market at a good valuation.
Due to huge underwriting losses, United India Insurance and Oriental Insurance Co Ltd, have suffered net losses of Rs 429 crore and Rs 382 crore respectively, in the first half of the current fiscal.
Both were profitable companies in the year-ago period. While United India had posted a net profit of Rs 356 crore, Oriental Insurance had registered a profit of Rs 335 crore a year ago.
Last week, the government approved listing of five state-owned general insurance companies to encourage them to raise funds from capital markets and also improve corporate governance.
The Cabinet Committee on Economic Affairs, headed by Prime Minister Narendra Modi gave ‘in principle’ nod for listing of five government-owned General Insurance Companies — New India Assurance Company, United India Insurance, Oriental Insurance Company, National Insurance Company and General Insurance Corporation of India (GIC).
The government shareholding in these companies will be reduced from 100 per cent to 75 per cent in one or more tranches over a period of time. (PTI)