The highly anticipated IPO (IPO) of Life India Corporation of India (LIC) is slated for the last week of April, sources have confirmed. The government is considering increasing the stake it intends to sell through public issuance from the aforementioned 5 percent. The war between Russia and Ukraine and its impact on the domestic stock market has prompted the government to start a discussion about increasing the size of the mega LIC IPO.
LIC IPO: Government to increase the volume of LIC share sales?
A decision on increasing the size of LIC’s IPO is expected to be made later in the day. The Department of Investment and Public Asset Management (DIPAM) is likely to meet with investment bankers on Tuesday to discuss the matter, sources told CNBC-TV18. Based on the feedback, the government may submit the updated draft of the red herring prospectus, or DRHP, to the market regulator Securities and Exchange Board of India (Sebi) on Wednesday.
The Union government planned to raise about Rs 60,000 crore by selling its 5 percent stake. It can sell as much as 7.5 percent of LIC without requesting an exemption from the market regulator. It may decide to sell the stake between 5.5 percent and 6.5 percent, depending on the investor’s interest, the aforementioned source.
IPO date LIC
All investors are eagerly awaiting the largest ever public issuance in the history of Indian capital markets. The embedded value of LIC has been calculated to be Rs 5.39 lakh crore on September 31, 2022, according to the draft document. The valuation of LIC IPO is likely to be three to five times the embedded value.
The government planned to launch LIC’s IPO by fiscal year 2022. However, the war between Russia and Ukraine and the volatile situation in the stock market have derailed the timeline. On March 1, Finance Minister Nirmala Sitharaman said: “Ideally I would like to go ahead with it as we had been planning it for a while based on purely Indian considerations. But if global considerations justify having to look at it, I wouldn’t mind taking another look at it.” Explain it to the whole world,” she added.
Now the government is likely to launch LIC IPO between April 25 and 29, the sources confirmed.
LIC IPO quota reserved for investors
The government has reserved about 50 percent of LIC’s IPO for the Qualified Institutional Buyers (QIB). For non-institutional investors (NII), the share will be approximately 15 percent. LIC IPO’s retail quota is set at 35 percent of the bid. One third of the anchor investor portion will be reserved for domestic mutual funds.
A significant portion will also be reserved for policyholders and may not exceed 10 percent of the public issue. 5 percent of LIC’s IPO is also reserved for employees. Both employees and policyholders will have the opportunity to book LIC IPO at a discounted rate.
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