LIC board approves reduction in its initial public offering (IPO) from 3.5% to 5%
New Delhi:
Sources said the LIC board has approved the reduction of its initial public issue size from 5 per cent to 3.5 per cent. The government will now sell 3.5 per cent of its shares in LIC for Rs 21,000 crore, subject to the approval of capital markets regulator Securities and Exchange Board of India, or SEBI.
In the draft red herring prospectus, the government had proposed to sell its 5 per cent stake. With this, the value of LIC will be Rs 6 lakh crore.
Earlier government estimates called for the insurer to be valued at around Rs 17 trillion.
The sharp drop in ambitions for the IPO – which will still be India’s biggest ever – is seen as a setback for the government, which has made the sale the first and first step of privatization aimed at replenishing the state exchequer. as the biggest wave.
“Investors have turned away from a lot of risk in the last few months. After the roadshow we realized that there is no point in putting forward higher valuations. Higher valuations can be discovered after listing. After all, the government is still Will hold about 95 percent of the issue,” news agency Reuters reported on Friday, citing an unnamed source.
The LIC IPO is likely to launch in the first week of May, investment banking sources told Reuters.
The government initially wanted to list LIC in the last financial year ended March 31, but the sale was delayed after the market collapsed following Russia’s invasion of Ukraine.
The 66 year old company dominates the insurance sector in India with over 280 million policies. It was the fifth largest global insurer in terms of insurance premium collection in 2020, the latest year for which figures are available.
Investors are concerned that the investment decisions of LIC, including loss-making PSUs, may be affected by the demands of the government.