LIC will now sell 3.5% stake in IPO; preparing to raise Rs.21 thousand crore from it
Reetu | Apr 25, 2022 |
LIC will now sell 3.5% stake in IPO; preparing to raise Rs.21 thousand crore from it
The size of the Initial Public Offering (IPO) of Life Insurance Corporation (LIC) has been reduced. The government will now sell 3.5% stake in the issue of LIC, the country’s largest insurance company. An official with knowledge of the matter said that the government is preparing to raise Rs.21,000 crore by selling 3.5% stake.
Previously, the government planned to sell a 5% interest. However, if market demand for the issue is strong, this restriction can be lifted from 3.5 percent to 5 percent. However, no information as to why this was done has been obtained.
The government plans to sell a 3.5 percent interest in the company to raise Rs.21,000 crore. As a result, the LIC is valued at Rs.6 lakh crore. Although the government had previously estimated the LIC’s market worth to be around Rs.17 lakh crore.
According to a Reuters story, a government official stated that the stock will be listed in the next two weeks. According to a PTI report published earlier on Thursday, the government may make a decision on the IPO launch this week.
It stated that the majority of the groundwork for the IPO has been completed, but that the response of possible anchor investors on the issue’s pricing will be examined this week before a final decision is made.
The government intended to launch the IPO in March 2022, but market sentiments soured as a result of the Russia-Ukraine conflict, prompting the administration to take a wait-and-see approach. Now that the market has rebounded and attitudes have improved to some level, the government has resumed preparations for the IPO. The government also changed the FDI laws earlier this month to allow 20% foreign direct investment (FDI) in LIC.
The government has till May 12 to file new paperwork with the Securities Exchange Board of India (SEBI) for clearance before launching an IPO. If the IPO has not yet been launched, it will have to be postponed to August or September in order to file new paperwork with SEBI, as well as revised quarterly results and valuations.
The LIC IPO will be the largest in Indian stock market history. The government can raise Rs.30,000 crore by selling a portion of its LIC holdings. Following its IPO, LIC’s market value will compete with that of leading corporations such as RIL and TCS. Prior to this, the largest IPO was that of Paytm, which raised Rs.18,300 crore via an IPO last year.
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