LIC IPO Launch Likely in End-April
- ByStartupStory | April 19, 2022
In a significant development leading to the run-up to the listing of the life insurance giant, the government has amended the rules of the Foreign Exchange Management Act . The move has helped pave the way for up to 20% FDI in LIC. The FEMA notification is needed to operationalise the already approved and revised Foreign Direct Investment policy to facilitate overseas investment in the mega IPO
The LIC IPO when it happens would be the biggest ever in the history of the Indian stock market. As per the latest DRHP, the government will dilute a 5% stake in the insurance behemoth through 31.6 crore shares to garner nearly INR 63,000 cr. Once listed, LIC’s market valuation would be comparable to big companies such as TCS,RIL. So far, the amount mobilised from the Initial Public Offering of Paytm in 2021 was the largest ever at INR 18,300 crore, followed by Coal India (2010) at nearly INR 15,500 crore
According to sources, the insurance major is likely to file an updated draft red herring prospectus for the LIC IPO after consultations with a key meeting of the LIC board and between the Department of Investment and Public Asset Management and investment bankers.
The LIC board is likely to soon decide on reducing the valuation of the company and offering more shares in its IPO, that will make the float more attractive to many of its policyholders who are first-time investors. The government is at present looking at a valuation of around Rs 11 lakh crore from the IPO against INR 16 lakh crore earlier.
The Government planned to launch LIC IPO by the financial year 2022. However, the Russia-Ukraine war coupled with the volatile situation in the stock market, made the planned-out timeline futile. Now, the government is expected to launch LIC IPO between April 25-29, the sources have said.
The government has also reached out to Abu Dhabi Investment Authority, Singapore-based GIC, three Canadian pension funds, Qatar Investment Authority, etc. for being anchor investors in LIC India’s IPO.
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