GIC to buy stakes of former subsidiaries

New Delhi: General Insurance Corporation (GIC) has decided to buy out the stakes of its former and present subsidiaries. GIC will buy out the stake at a price of Rs 1.50 per share.

The consolidation of stake by GIC is being done with a view to increase its stake to more than 40 per cent in GIC Mutual Funds and to provide cash flows to GIC Housing Finance (GICHF).

With the formal de-linking of its four general insurance subsidiaries from GIC, the share of the corporation has come down to 20.4 per cent. As per the Securities and Exchange Board of India regulation, GIC needs to have a minimum stake of 40 per cent of the equity to qualify as a sponsor of the asset management company.

Currently, GIC holds only 9.9 per cent. Another 10.5 per cent is held by GICHF. Each of the former GIC subsidiaries - New India, United India, Oriental and National - were holding 9.9 per cent each, taking the combined GIC tally to 60 per cent. The remaining 40 per cent is with the Soros group.

Further, the four insurance companies have no strategic interest in a mutual fund operation, as they are hard-core insurers and want to remain so.