LIC IPO: Life Insurance Corporation of India (LIC) has received SEBI’s approval to float its mega public issue, CNBC-TV18 and ET NOW reported citing sources. State-owned LIC had filed the Draft Red Herring Prospectus (DRHP) for its IPO with the capital markets regulator earlier in February to sell a 5% stake in the firm. Although SEBI has given its green light to the IPO, the government may delay the process owing to the current geopolitical situation where foreign investors have reduced their appetite for Indian equities. Earlier, Finance Minister Nirmala Sitharaman in an interview to Businessline had said she “wouldn’t mind” relooking at the LIC IPO timeline if “global considerations warrant that”. Financial Express had also reported, citing sources that government may reconsider LIC IPO date amid a choppy market environment. LIC IPO is expected to be the largest ever to hit Dalal Street.
The government is looking to sell a 5% stake in the state-run insurance behemoth which is expected to garner somewhere around Rs 63,000 crore for the government, helping it bridge the gap between its divestment receipts and divestment target. However, in recent weeks, after Russia’s invasion of Ukraine, reports suggest, the government has thought of reconsidering the timeline for LIC IPO. Financial Express earlier reported that amid the prevailing volatile sentiment, LIC shares would need to be priced lower than the currently expected Rs 2,000-2,100. Market experts believe that only in a good market, would it be possible to attract a market capitalisation of Rs 13-14 lakh crore.
According to the DRHP filed by LIC on February 13, the government is looking to offload 316,249,885 equity shares of face value Rs 10 each through the public issue. The embedded value of LIC was finalised at more than Rs 5 lakh crore. The proceeds of the LIC share sale will go to the Government of India, and the insurance company will not receive any funds from the all-OFS IPO, as there will be no fresh issue of equity shares.
Currently, LIC is entirely owned by the government of India. The IPO will have a 50% share reservation for Qualified Institutional Buyers (QIB) followed by a 35% reservation for retail investors and 15% for Non-Institutional Investors. Policyholders of the state-run insurance company will also have a quota reserved in the LIC IPO along with employees of LIC.
This article was originally posted here.
