GIC Re weighs options for its holding in GICHFL, including stake sale
GIC Re, India’s largest re-insurer, is planning to take a long, hard look at its stake in GIC Housing Finance Ltd (GICHFL), weighing options such as fast-tracking its growth or bringing in a private investor.
The re-insurer is the single largest shareholder in GICHFL, with a 15.26 per cent stake. The four public sector general insurers – New India Assurance Company (8.65 per cent stake), United India Insurance Company (7.35 per cent), National Insurance Company (5.63 per cent) and Oriental Insurance Company (5.52 per cent) — collectively hold 27.15 per cent stake.
The aforementioned five companies are classified as promoter and promoter group of GICHFL. The company was set up in 1989 as part of the government’s push for housing.
Better focus
“What used to happen earlier was that, typically, the person at the top in GICHFL used to be from any one of the (five) companies… That person would be there for a year or two and then move somewhere else. So, the focus was definitely not there. Now, there is more focus because GIC Re has taken interest in the operations of the company,” Ramaswamy N, Chairman and Managing Director, GIC Re, told businessline.
According to him, in the last couple of years, a GIC Re senior official has been helming GICHFL, trying to scale up its operations and improve asset quality.
“We want GICHFL to boost its business. We’ll see for a year or so. If things don’t really work out, then we might we might even sell our stake. Maybe, we can find a private investor who will be able to push this company forward. There are multiple things that we can do,” he said.
Asset quality
Ramaswamy added that the housing finance company has a professional board, improved its asset quality and paid dividend every year.
In the first quarter of FY25, GICHFL’s sanctions were markedly higher at ₹416 crore compare with ₹ 235 crore in Q1FY24 as also disbursement at ₹375 crore (₹227 crore). As of June-end 2024, gross loan portfolio declined marginally to ₹10,281 crore (₹10,459 crore).
As of June-end, the company’s gross non-performing asset (NPA) and net NPA position improved to 3.98 per cent of gross advances (4.69 per cent) and 2.56 per cent of net advances (3.25 per cent).