The long-awaited Life Insurance Corporation (LIC) public issue offer is finally here, with the long-awaited initial public offering (IPO) will open on May 2 for anchor investors and from May 4 to May 9 for the general public, according to the insurance behemoth’s news conference on Wednesday.
The price range for India’s largest public issue would be 902-949, with a 60 percent reduction for policyholders and a 45 percent discount for retail investors and employees.
Employee reservations will account for 5% of the post-offer equity share capital, while policyholder reservations will account for 10% of the offer amount.
The LIC board of directors agreed a reduction in the IPO issue size from 5% to 3.5 percent on Saturday, according to the business. The government will now sell a 3.5 percent share in LIC for Rs 21,000 crore, valuing the insurer at Rs 6 lakh crore.
Government sources had said on Tuesday that depending on the demand and subscription at the IPO, there is an option for the government to increase the stake offer to 5 per cent, in which case the state’s coffer will garner ₹ 30,000 crore from the sale of its equity.
The government’s budgetary balances would be harmed by the substantial reduction in IPO objectives, as the disinvestment was positioned and intended at refilling the state’s coffers.
LIC’s IPO will be India’s largest ever, regardless of whether the ultimate offer is a 3.5 percent stake sale for 21,000 crore or a 5% stake sale for 30,000 crore.
Indeed, at 21,000 crore, the public offering will be greater than the amount raised from Paytm’s IPO in 2021, which is currently the largest ever at 18,300 crore, followed by Coal India (2010) at about 15,500 crore and Reliance Power (2008) at 11,700 crore.
To fulfil the limited disinvestment target of 78,000 crore in 2021-22, the government was hoping to raise over 60,000 crore by selling roughly 31.6 crore or 5% of the life insurance firm.
The stake sale was supposed to start in March 2022, but the Russia-Ukraine crisis threw the plans off because stock markets were extremely volatile at the time.
The government has until May 12 to launch the LIC IPO without having to file new papers with the Securities and Exchange Board of India, including financials (SEBI).
If the government misses the May 12 deadline, LIC will have to file new paperwork with SEBI for clearance. Any further delay in the LIC IPO would be added to the increasing list of planned offerings that have been postponed as the war dampens investor interest for risky assets.
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