LIC IPO: The government is expected to take a call on the date and timing of the most anticipated initial share sale of the time — the LIC IPO — within this week, a report has said. The LIC IPO was originally set to be opened in March, but various factors, including the Russia Ukraine war has delayed the initial share sale of the life insurance behemoth. The LIC IPO would be the biggest ever in the history of the Indian stock market.
In its previous Draft Red Herring Prospectus, the government said it intended to sell 5 per cent stake or 31.6 crore shares in the LIC IPO to garner Rs 63,000 crore.. A senior official has now told PTI that the government has time till May 12 to launch the IPO without filing fresh papers with markets regulator Sebi. The official said it would be a tough call to decide whether to go ahead with the retail and domestic investor demand or to wait for geopolitical tension to ease and FIIs to return to market.
“A decision on timing the IPO would be taken this week,” the official told PTI. LIC’s embedded value, which is a measure of the consolidated shareholders’ value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.
If the government decides to go ahead with the LIC IPO by May 12 this year, then the life insurer will have to file the red herring prospectus with Sebi by next week. The official also said that “under the present market condition the government is unlikely to offload more than 5 per cent stake in the life insurance behemoth. When we are already facing headwinds, we cannot test waters with higher IPO size.”
However, it has also been reported that the country’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.
The government had earlier planned to launch the LIC IPO by financial year 2021, but the plans got delayed due to the geopolitical tensions, while the finance ministry also reduced its divestment target to a modest Rs 65,000 crore from an earlier Rs 78,000 crore. “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,” finance minister Nirmala Sitharaman had said in March.
The LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal year. The Centre has shortlisted 50-60 anchor investors, which include BlackRock, Sands Capital, Fidelity Investments, Standard Life, and JP Morgan, and will soon finalise its anchor book.
(With PTI inputs)
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