LIC IPO: The IPO of the country’s largest insurance company LIC was about to come in March this year. But then it got postponed due to tremendous volatility in the market. However, now the government is preparing to launch the issue of LIC in May. CNBC-TV 18 has given this information on the basis of conversation with sources on 5 April.
Sources said the government is in touch with bankers and financial advisors regarding red herring prospects (RHP). RHP refers to the offer document that the issuing company gives to the market regulator SEBI before listing. Along with RHP, the issue price of LIC’s IPO will be fixed. Also, it will be known when the issue of the company is opening. Sources also said that the government can sell more than 5% stake in the issue of LIC.
Sources with knowledge of LIC IPO said that the company’s executives are working in a challenging environment. He said that the market has now recovered from the global uncertainties.
Sources also told CNBC-TV 18 that on March 8, SEBI has allowed LIC to raise funds by selling the issue.
According to the draft red herring prospectus (DRHP) submitted to SEBI, the government will sell 31 crore equity shares. A portion of the IPO will be reserved for anchor investors. About 10% of the issue amount will be set aside for policyholders.
The government was earlier set to raise Rs 63,000 crore by selling its 5% stake in the fiscal year 2022. But due to market volatility, the issue of LIC could not be launched till March 2022. In the fiscal year 2022, the government had reduced the target of disinvestment plan to Rs 78,000 crore.
Totally offer for sale
LIC’s IPO will be purely Offer for Sale (OFS). The government will sell its stake in this. No fresh issue will be issued. The government has 100% stake in LIC i.e. 632.49 crore shares. The face value of the shares of the company is Rs 10.
biggest issue of indian stock market
LIC’s issue is the largest IPO in the history of the Indian stock market. After the listing of the company, its market valuation will reach at par with top companies like RIL and TCS.
How long is the time?
The government has time till May 12 to bring the issue of LIC. If the government is not able to bring the issue by May 12, then it will have to submit the DRHP again to SEBI. The government had submitted the DRHP on February 12. Accordingly, the issue will have to be brought by May 12.
An official privy to the development said, “We have time till May 12 to bring the IPO. We are monitoring the market volatility and will file RHP along with the price band soon.”