As the government prepares for the LIC’s IPO in the coming month, numerous developments in the process are beginning to emerge amid grim global market prospects and inflation forecasts. The government is weighing all the points to lure investors and promise value. The nation’s largest insurer is likely to file an updated draft red herring prospectus (UDRHP) for the LIC IPO after consultations between the Department of Investment and Public Asset Management (DIPAM) and investment bankers and a key meeting of the LIC board, it said. the media reports.
According to the current DRHP, the government will dilute a 5 percent stake in the insurance giant to 31.6 crore shares to raise Rs 63,000 crore. It would help meet the limited divestment target of Rs 78,000 crore for the current fiscal year. Here are the key developments that investors should be aware of.
Center plans to separate appreciation
The LIC board is meeting this week to decide on lowering the company’s valuation and offering more shares in the first public offer that will make the stock more attractive to many of its first-time investing policyholders. The insurer plans to lower its valuation by 30 percent and offer 7 percent of its shares to the public, up from 5 percent previously. The government is now looking at a valuation of around Rs 11 lakh crore from the IPO against Rs 16 lakh crore previously.
Revised IPO papers in the works
The LIC board is meeting this weekend to “finalize results for fiscal year 22 and then submit a revised public offer by mid-next week,” sources told The Economic Times. A government source also said the list would be “complete by May 12”.
The company will submit the revised documents to the Insurance Regulatory and Development Authority of India (IRDAI) after the results are approved by the board of directors. There are also hints of an opening in late April for the issue after the roadshows are completed.
IPO date LIC
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 have said.
LIC IPO reserved portions
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.
LIC IPO Anchor Investors completed
Center has shortlisted 50-60 anchor investors, including BlackRock, Sands Capital, Fidelity Investments, Standard Life and JP Morgan, and will be finalizing its anchor book soon.
Further, according to sources, the IPO has attracted significant interest from local and foreign investors, with at least 12 top fund managers committed to raising around Rs 18,000 crore as anchor investors.
The public issuance of LIC would be the largest IPO in the history of the Indian stock market. Once listed, LIC’s market valuation would be comparable to top companies such as Reliance Industries Limited and Tata Consultancy Services.
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