IPO IPO: The government is expected to make a phone call within this week regarding the date and timing of the most anticipated first share sale of the time — the LIC IPO — a report said. The LIC IPO was originally set to open in March, but several factors, including the war between Russia and Ukraine, have delayed the life insurance giant’s first share sale. The LIC IPO would be the largest ever in the history of the Indian stock market.
In its previous Draft Red Herring Prospectus, the government said it planned to sell a 5 percent or 31.6 crore share of the LIC IPO to raise Rs 63,000 crore. A senior official has now told PTI the government has until May 12 to launch the IPO without filing new papers with market regulator Sebi. The official said it would be a difficult decision to decide whether to proceed with demand from private and domestic investors or wait for geopolitical tensions to ease and FIIs return to the market.
“A decision on the timing of the IPO would be made this week,” the official told PTI. The embedded value of LIC, which is a measure of consolidated shareholder value in an insurance company, was set at approximately Rs 5.4 lakh crore on September 30, 2021 by the international actuarial firm Milliman Advisors.
If the government decides to go ahead with the LIC IPO on May 12 this year, the life insurer must submit the red herring prospectus to Sebi next week. The official also said that “under current market conditions, the government is unlikely to divest more than 5 percent of its stake in the life insurance giant. If we already have headwinds, we won’t be able to test waters with a higher IPO size.”
However, it has also been reported that after consultations between the Department of Investment and Public Asset Management (DIPAM) and investment bankers and a key meeting, the country’s largest insurer is likely to submit an updated draft red herring prospectus (UDRHP) for the LIC IPO. of the LIC board.
The government had previously planned to launch LIC’s IPO by fiscal 2021, but plans were delayed due to geopolitical tensions, while the Ministry of Finance also lowered its divestment target to a modest Rs 65,000 crore from a previous Rs 78,000 crore. “Ideally, I’d like to continue with it, as we’d 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 looking at it again,” Finance Minister Nirmala Sitharaman said in March.
The IPO of the LIC would make an important contribution to the budgeted divestment proceeds in the current financial year. The center has shortlisted 50-60 anchor investors, including BlackRock, Sands Capital, Fidelity Investments, Standard Life and JP Morgan, and is set to finalize its anchor book soon.
(With PTI inputs)
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