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Due to Russia-Ukraine, the IPO of the country’s largest LIC may get delayed. Earlier it was expected to come in March, but considering the current market situation and the changed situation due to the Russo-Ukraine war, now the IPO is expected to come in March.
IPO may come in April-May
According to information received from sources, LIC’s IPO may come in April-May. In the condition of the DRHP filed by the government to SEBI, its approval continues till May 12. Meaning IPO can be brought till May 12.
Documents will have to be filed again if IPO is not brought by May 12
If the government is not able to bring an IPO by May 12, then it will have to file fresh papers with SEBI stating the results of the December quarter. An official said that though volatility in the market has eased in the last 15 days, one will wait for the market to stabilize further so that retail investors are confident of investing in the stock.
Preparations complete for IPO
According to sources, if there is a situation to bring an IPO after May 12, then changes will have to be made in the embedded value and results. But, according to sources, every effort will be made if the IPO is not able to come in March, then it can come in the last week of April or the first week of May. Its preparations have also been completed by the government and LIC. But the government does not want to take any risk with the kind of volatility in the market.
IPO draft was submitted on February 13
The country’s largest state-run insurance company had submitted the draft IPO (DRHP) to the market regulator SEBI on February 13, 2022. According to this, the company will sell about 31.6 crore or 5% shares. According to DRHP, 10% shares will be reserved for LIC policy holders in the IPO. They may also get a discount of 5% in the share price. To take advantage of the reservation, the PAN of the policy holders should be updated.
Biggest IPO will be
LIC’s issue will be the biggest IPO ever in the Indian stock market. After listing, the market valuation of LIC will be at par with top companies like RIL and TCS. Prior to this, Paytm’s issue was the biggest and the company had raised Rs 18,300 crore from IPO last year.
20% FDI allowed in LIC
Recently, the Union Cabinet has changed the FDI policy to include foreign investors in this IPO. Under this change, foreign investment has been allowed in LIC’s IPO under the automatic route up to 20%.
LIC is like a moneylender’s vault for the government
Whenever the government is in trouble, LIC is used like a moneylender’s safe. At the time of ONGC’s IPO in 2015, LIC had invested about 10 thousand crores. In 2019, when it came to salvaging the debt-ridden IDBI Bank, LIC once again opened its bag.
Governments have taken 23 lakh crore rupees from LIC
According to RBI data released in 2019, LIC has invested Rs 22.6 lakh crore in the government sector since its inception. Out of this, Rs 10.7 lakh crore has been invested only between 2014-15 to 2018-19.
At present it is a 100% government company, but between January and March 2022, the government is going to sell 10% of the company’s stake in the stock market. The government expects to raise more than 90 thousand crore rupees from LIC’s IPO.