Mumbai: Life Insurance Corp. of India (LIC) has put in a major bid for shares of reinsurer General Insurance Corp. of India Ltd (GIC Re), in the latter’s ongoing initial public offering (IPO), said two people aware of the development, on the condition of anonymity.

The GIC Re IPO is looking to raise Rs11,372 crore ($1.7 billion) at the upper end of the price band of Rs855-912 per share. The share sale values the insurance firm at Rs80,000 crore.

“LIC has made a substantial bid in the institutional portion of the book as a result of which the institutional portion is already oversubscribed and the overall IPO too is substantially subscribed on the first day itself,” said one of the two persons cited above.

LIC has bid for shares worth around Rs7,000-8,000 crore, the second person cited above said. Mint could not ascertain the exact quantum of the LIC bid.

As of 5pm, the portion of shares reserved for institutional investors in the GIC Re IPO was subscribed 1.55 times, while the overall IPO was subscribed 80%, according to data from stock exchanges.

LIC chairman V.K. Sharma said that LIC has invested in the GIC Re IPO. However, he declined to comment on the quantum of the bid made. A separate email sent to LIC did not elicit any response.

GIC Re’s share sale is the second largest IPO to hit the Indian primary market since state-owned Coal India Ltd’s Rs15,200 crore initial share sale in 2010, which remains the largest public offering till date by an Indian entity.

GIC Re is the largest reinsurance company in India and accounted for about 60% of the premiums ceded by Indian insurers to reinsurers during fiscal 2017, according to Crisil Research.

The company offers reinsurance services in key businesses such as fire (property), marine, motor, engineering, agriculture, aviation, health, liability, credit and financial liability, and life insurance.

The share sale will see a total stake dilution of 14.22%. It also includes a fresh issue of Rs1,568.6 crore. Proceeds from the fresh issue will be used for augmenting the capital base of the reinsurer, to support the growth of its business, maintain current solvency levels and for general corporate purposes.

The government, in an offer for sale, plans to sell a total of 107.5 million shares, which at the upper end of the price band will fetch it about Rs9,804 crore.

GIC’s initial share sale is part of the Union government’s divestment plan, under which the department of investment and public asset management (DIPAM) plans to sell government stakes in several central public sector enterprises through various routes such as IPOs, offers for sale and strategic sales.

State-owned companies that have been cleared for IPOs include three defence ministry enterprises—Bharat Dynamics Ltd, Garden Reach Shipbuilders and Engineers Ltd and Mazagon Dock Shipbuilders Ltd— along with MSTC Ltd and Mishra Dhatu Nigam Ltd, controlled by the steel ministry, North Eastern Electric Power Corp. Ltd, which is under the power ministry, and Hindustan Aeronautics Ltd and New India Assurance Co.