The much-awaited initial public offering (IPO) of Life India Corporation of India (LIC) is all set to open in the last week of April, sources confirmed. The government is considering to increase the stake it plans to sell via public issue from 5 per cent mentioned earlier. The Russia-Ukraine war and its impact on the domestic stock market, has prompted the government to start a discussion on increasing the size of mega LIC IPO.
LIC IPO: Govt to Increase the Size of LIC Share Sale?
A decision on raising the size of LIC IPO, is expected to be taken later in the day. Department of Investment and Public Asset Management (DIPAM) is likely to meet the investment bankers on Tuesday to discuss the matter, sources told CNBC-TV18. Based on the feedback, the government may file the updated draft red herring prospectus or DRHP with market regulator Securities and Exchange Board of India (Sebi) on Wednesday
The Union government was aiming to raise around Rs 60,000 crore by selling its 5 per cent stake. It can sell as much as 7.5 per cent of LIC without seeking an exemption from the market regulator. It may decide to offload stake between 5.5 per cent to 6.5 per cent, depending on the investor interest, the source mentioned earlier.
LIC IPO Date
All investors are eagerly waiting for the largest-ever public issue in the history of Indian capital markets. The embedded value of LIC have been calculated at Rs 5.39 lakh crore as of September 31, 2022, according to the draft paper. The valuation of LIC IPO is likely to be three to five times the embedded value.
The government planned to launch LIC IPO by financial year 2022. However, the war between Russia and Ukraine and the volatile situation in the stock market, derailed the timeline. On March 1, finance minister Nirmala Sitharaman said, “Ideally, I’d like to go ahead with it because we’d planned it for some time based purely on Indian considerations. But if global considerations warrant that I need to look at it, I wouldn’t mind looking at it again.” “When a private sector promoter takes this call, he has to only explain this to the company’s board. But I would have to explain it to the whole world,” she further added.
Now, the government is likely to launch LIC IPO between April 25-29, the sources confirmed.
LIC IPO Quota Reserved for Investors
The government has reserved around 50 per cent of LIC IPO for the Qualified Institutional Buyers (QIB). For Non-Institutional Investors (NII), the portion will be around 15 per cent. Retail quota of LIC IPO has been fixed at 35 per cent of the offer. One-third of the anchor investor portion will be reserved for domestic mutual funds.
A significant portion will also be reserved for the policyholders and it should not exceed 10 per cent of the public issue. For employees also, 5 per cent of LIC IPO will be reserved. Both the employees and policyholders will get a chance to book LIC IPO at a discounted rate.
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