Mumbai/Delhi: The market regulator of India has approved the IPO application by Life Insurance Corporation of India, India’s largest and only state-owned life insurance company. LICThe disinvestment of its 5% stake in the insurer paves the much-awaited avenue for the government.
Two persons with direct knowledge of the matter confirmed on condition of anonymity as the approval is yet to be officially announced by the regulator.
“A clarification was sought from the principal manager of LIC by the Securities and Exchange Board of India (SEBI) on March 3 and a response was quickly received. The final observation for the public issue has been issued by SEBI on Tuesday evening. It will be Will soon be formally revealed to the public,” the first person said.
Despite the massive 650-page prospectus given for SEBI to investigate, the insurer has got SEBI approval in just 22 days and after a round of clarifications from bankers. The government is planning to raise Rs. 65000-80,000 crore from 5% stake sale of LIC through Initial Public Offering.
The government is still in the process of finalizing the date of launch of LIC’s public float.
Originally, the government had targeted mid-March to launch the IPO.
However, due to turmoil in the equity market in the wake of the ongoing Russian invasion of Ukraine and panic among global investors, the government is reportedly in a dilemma regarding the launch timing of LIC IPO.
The first person said, “The government is not sure whether to launch the IPO in March or postpone it till mid-April. Meetings of the expert committee are underway and a decision will be taken soon,” the first person said.
The success of the LIC IPO is crucial for the government to meet its asset sale target, which has been slashed by more than half to Rs 78,000 crore for the current fiscal. Meeting the disinvestment target before the end of March will be crucial for the exchequer to bring down the fiscal deficit.
Bankers said efforts are in full swing to ensure the success of the mega IPO, even as market regulators are prompting investment bankers not to crowd the market in the next few weeks.
That said, some companies will need to be persuaded against going face-to-face with an 800-pound gorilla, investment bankers said, referring to the staggering scale of the state-run insurance behemoth’s public offering.
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