Major sovereign funds including Abu Dhabi Investment Authority, Singapore-based GIC, three Canadian pension funds and Qatar Investment Authority have shown interest to become anchor investors. Upcoming IPO of Life Insurance Corporation (LIC)According to the report of ET. first public offer (IPO) is expected to launch by the end of this month. It will allocate 60 per cent of Qualified Institutional Buyers (QIBs) to anchor investors on a discretionary basis.
“Several leading sovereign funds have expressed interest in LIC IPO. Merchant bankers are in advanced discussions with them to be the anchor investors in the issue.’ Here’s what you need to know about the upcoming IPO and the developments surrounding it:
Government is making it more attractive
The government is planning to reduce Evaluation of state-owned insurance behemoths Up to 30 percent off to make it more attractive. It has a valuation of around Rs 11 lakh crore from the IPO, up from Rs 16 lakh crore earlier. As per the draft IPO, the embedded value of the firm as on September 31, 2022 was Rs 5.39 lakh crore. The valuation of the IPO is likely to be three to five times the embedded value.
IPO issue date
The government is planning to launch this offer by the end of this month. The government filed fresh draft papers for the IPO last month and now, it has time till May 12 to launch the offer. If the Center fails to launch the IPO by then, it will have to file fresh papers with the Securities and Exchange Board of India, give the December quarter results and also update the embedded price.
The IPO was earlier planned to be launched by March in the last financial year 2021-22, but the high volatility in the markets due to the Russo-Ukraine war derailed the plan.
size of ipo
The government aims to raise around Rs 60,000 crore by selling its 5 per cent stake or 316 crore shares in the state-run company. However, the Center is also considering increasing the size of LIC’s IPO. After holding discussions with investment bankers, the government may soon file an updated draft red herring prospectus (DRHP) with markets regulator SEBI.
Reserved quota for various investors
About half of the IPOs are earmarked for Qualified Institutional Buyers (QIBs), and 60 per cent of the QIBs are earmarked for anchor investors on a discretionary basis. One-third of the anchor investor will be reserved for domestic mutual funds.
About 15 per cent will be reserved for non-institutional investors (NIIs). Retail investors can participate in the 35% offer. A significant portion will also be reserved for policyholders and should not exceed 10 per cent of the public issue. For employees also, 5 percent of LIC’s IPO will be reserved. Both employees and policyholders will get a chance to book LIC IPO at a discounted rate.
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