LIC IPO: The much-awaited IPO of the government-owned Life Insurance Corporation of India (LIC) can be availed at a discount to its policyholders participating in the bidding. Giving this information, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kant Pandey said that the government is ready to submit the draft red herring prospectus (DRHP) or offer document to SEBI this week.
Concession for employees also
In a Livemint report, he said, “Under the retail window, it has some reservations. We also have a Policyholders window. We have provided in the LIC Act that IPOs can be offered to policyholders at some discount up to 10% of the issue amount on a competitive basis. There will also be some reservation for the employees.
Some concessions can also be expected for retail investors and employees, said two people associated with the transaction advisors of the IPO, but did not give further details. However, Pandey only confirmed the possibility of discount to LIC policyholders and did not comment on other categories of investors.
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Issue size expected to be between 5% and 10%
A source said, “Small investors may be offered a discount as the government wants to encourage common man’s participation in LIC’s IPO.” Advisors expect the issue size to be between 5% and 10%.
Pandey said, DRHP will know how much stake of LIC will be sold by the government through IPO. “A minimum of 5 per cent stake is expected to be sold,” he said.
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LIC IPO has nothing to do with disinvestment proceeds
“The reduction in expected disinvestment proceeds in the Revised Estimates (RE) for 2021-22 has nothing to do with the size of the IPO and the valuation of LIC, as the government’s disinvestment proceeds may even cross the RE figure,” he said.
The disinvestment target for 2021-22 has been reduced to Rs 78,000 crore from Rs 1.75 lakh crore in the Union Budget presented on February 1. The disinvestment target (BE) of Rs 65,000 crore for 2022-23 is also very low. Pandey said the disinvestment target and actual receipts may vary due to various reasons and should not be related to the size of LIC’s IPO.
DIPAM Secretary Tuhin Kant Pandey said, IPOs can be offered to policyholders at some discount up to 10% of the issue amount on a competitive basis.
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