The much anticipated mega initial share sale of Life Insurance Corp. (LIC) has been announced and the issue will open on 4 May, according to a PTI report. The bidding for IPO will go on till 9 May.
The IPO, through which the government will sell 3.5% stake in state-owned Life Insurance Corporation (LIC), will fetch ₹21,000 crore to the exchequer.
The stake sale at 3.5% will fetch far lower than the ₹50,000 crore estimated before Russia invaded Ukraine.
The IPO values LIC at ₹6 lakh crore. Earlier government estimates had called for the insurer to be valued at around ₹17 lakh crore.
As per Sebi norms, companies with valuation over ₹1 lakh crore have to sell 5% stake in IPO. The government has also filed papers with Sebi seeking exemption from the norm, the PTI report noted.
Even though the government has pared down the size of LIC IPO, the sale will still be India’s biggest, surpassing the listing of One 97 Communications Ltd., which raised about ₹18,300 crore in November last year.
Anchor investors had been reluctant to commit as the war eroded demand for equities, Bloomberg reported earlier, with foreign funds withdrawing more than $16 billion from Indian stocks this year.
The government in February had planned to sell a 5% stake in LIC. However, the ongoing market volatility due to the Russia-Ukraine war has made it lower the IPO size.
LIC dominates India’s insurance sector with more than 280 million policies. It was the fifth-biggest global insurer in terms of insurance premium collection in 2020, the latest year for which statistics are available.
LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal. The government has pegged disinvestment receipts at ₹65,000 crore in the current financial year, up from ₹13,531 crore mopped up last fiscal.