(Reuters) — The Indian government raised about 98 billion rupees ($1.5 billion) on Friday by selling some of its shares in General Insurance Corp. of India, the nation's top reinsurer, in the country's biggest listing in seven years.

The funds could be critical at a time when the government is looking to boost spending to help counter the slowest economic growth in more than three years, but has been constrained in part by lower-than-expected tax collections.

The government is aiming to raise 725 billion rupees by selling off some of its stakes in state-run companies in the year to March, including through the initial public offering of GIC Re, which was set to close later on Friday having already attracted 1.35 times the number of shares on offer.

GIC Re's IPO brings the total money raised through IPOs this year to about $8 billion, not far from the record $8.65 billion in 2007, amid a market rally that has sent indexes to record highs. The NSE index closed up 0.7% after hitting its latest all-time high earlier in the session.

GIC Re, which had a 60% share in India's reinsurance market according to Crisil Research, is expected to benefit from growing premiums in India, which has relatively lower insurance penetration. The company is also expanding internationally.

"We are not expecting any fancy listing gains on GIC Re just like in other recent insurance company IPOs, but the company is a good long-term buy," said Krishna Rana, an analyst with brokerage Sushil Finance.

"Insurance is a relatively new sector and the knowledge about this sector is still quite low, so retail interest in these IPOs also has been lower," she added.

The government, which currently fully owns the reinsurer, was selling 107.5 million shares in the IPO, while the company was selling 17.2 million new shares, for a total IPO size of 113.7 billion rupees ($1.75 billion).

The total offer of 124.7 million shares constitutes 14.2% of the post-offer paid up share capital.

Crisil estimates reinsurance premiums in India will grow at an average annual rate of 11% to 14% over five years to reach 700 billion rupees by March 2022.

Most analysts had recommended subscribing to the IPO, citing its reasonable valuations, although recent lackluster listings by two big insurance companies had dampened sentiment.

GIC Re is set to debut in markets on Oct. 25.

The GIC Re IPO was the biggest since Coal India's 2010 share sale that raised 155 billion rupees.