LIC IPO: Here's why government decided to launch India's largest public offer now
The LIC IPO is set to open on May 4 and will close on May 9. The IPO, which was to be launched in March this year, was postponed after Russia's invasion of Ukraine. Here's why government decided to launch India's largest public offer now.
Tuhin Kanta Pandey, Secretary of Department of Investment and Public Asset Management (DIPAM), on Wednesday said that the decision to list insurance major Life Insurance Corporation (LIC) now was influenced by reduced market volatility and solid anchor book.
Pandey added that the volatility caused by global factors led by the Ukraine-Russia war has come down and that the markets have recovered.
The LIC IPO, which was to be launched in March this year, was postponed after Russia's invasion of Ukraine that sent shockwaves through markets that may have led to reduced enthusiasm around the public issue.
MR Kumar, Chairperson for LIC, said the company has held on to more than normal market share and the time has come for it to get listed.
The LIC IPO is now set to open on May 4 and will close on May 9. It will open for the anchor tranche on May 2. The government has set a price band of Rs 902 to 949 per equity share, with a discount of Rs 60 for policyholders.
The IPO size has been trimmed to raise Rs 21,000 crore, from the earlier Rs 35,000 crore, with the government reducing its stake dilution to 3.5 percent from the earlier 5 percent.
As sources told CNBC-TV18 earlier, the government had asked for an exemption from market regulator SEBI from the mandatory 5 percent listing as the market would not have enough appetite for the same.
Pandey said that the current dilution is very small in the overall journey of LIC.
He added that the Centre had a strong commitment to list LIC as it is a part of the long term strategic vision of the government.
"This is an opportunity for people of India to become a part of this wealth creation," he said, adding that the life insurance sector is an underpenetrated market and would benefit as the economy grows. He hoped the company would be listed "comfortably".
Pandey also said that there will not be a follow-on public offer (FPO) for LIC for at least a year. CNBC-TV18 on April 24 had reported that the government would not approach the market for the company's FPO for a year after the IPO.
An FPO is a process in which a company already listed on the stock exchange issues new shares to the existing shareholders or to the market for new investors. An FPO is used by a company to diversify its equity base or pay off debt.
According to the rules, companies are not allowed to launch FPOs for six months after their IPOs.
LIC IPO will be the biggest public offer in the country even after the reduced size.
First Published: Apr 27, 2022 1:26 PM IST
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