After GIC Re’s weak debut, public sector insurer New India Assurance also disappointed investors with the share tanking by over nine per cent on the listing day on Friday.
The stock listed at Rs 748.90, down 6.38 per cent, compared to the issue price on the BSE. During the day, the stock tumbled 10.28 per cent to Rs 717.75 and finally ended at Rs 725.05, down 9.37 per cent from the issue price of Rs 800. The company’s market capitalisation stood at Rs 59,744 crore.
The price band for the Rs 9,600 crore New India offer was set at Rs 770-800 per share and the company fixed the offer price at Rs 800 after the closure of the issue. While the IPO was subscribed 1.19 times, the portion set aside for qualified institutional buyers (QIBs) was subscribed 2.34 times, non-institutional investors 12 per cent and retail investors 11 per cent, according to data available with the NSE. Financial institutions led by LIC invested heavily in the New India IPO with the LIC getting bulk of the shares on offer.
New India Assurance chairman-cum-managing director G Srinivasan said, “Companies like us have large technical reserves, what is known as policy holders liabilities, outstanding claims and reserve for an expired risk. We have technical reserve of Rs 28,000 crore. We have taken a lot of steps to rationalise the prices and also to manage claims more efficiently. So there is going to be a lot of improvement in the claims ratio and the combined ratio as well as the adjusted combined ratio.”
On October 25, shares of public sector General Insurance Corporation of India (GIC Re) made a disappointing debut at the bourses, falling 4.5 per cent against the issue price of Rs 912. The stock got listed at Rs 850, down 6.79 per cent from the issue price on BSE. During the day, it tumbled 14.44 per cent to Rs 780.25. It finally ended 4.56 per cent lower at Rs 870.40. While GIC Re’s Rs 11,000 crore IPO was oversubscribed 1.38 times during October 11-13, the retail investor portion remained undersubscribed. The reinsurance company had fixed the price band at Rs 855-912 for its IPO.
GIC shares are yet to recover from the initial setback. GIC closed with a loss of 1.05 per cent at Rs 811.25 on the BSE on Friday.
While SBI Life Insurance Company, a subsidiary of SBI, made its debut on the BSE at Rs 733.30, a premium of 4.75 per cent over its issue price of Rs 700, on October 3, 2017, its share closed below the issue price at Rs 665.60 on Monday.