LIC IPO: Country's biggest IPO may come by the end of April, decision on launch expected soon

Posted on 11th Apr 2022 by rohit kumar

Due to the ongoing war between Russia-Ukraine, the preparations for bringing the country's biggest IPO were put on hold. But now the round of discussions has started again regarding the launch of this IPO of LIC. According to a report, officials have suggested mid-April or end dates to an apex group of ministers for the IPO of the country's largest insurance company.

 

 

Suggestions are given to the group of ministers

 

The Group of Ministers to whom this suggestion has been made by the officials includes Finance Minister Nirmala Sitharaman, Road and Transport Minister Nitin Gadkari, and Commerce and Industry Minister Piyush Goyal. It is expected in the report that soon this group of ministers can decide on LIC IPO. The report said that the Department of Investment and Public Asset Management (DIPAM) and government-appointed officials have assessed the situation by keeping a close watch on the stock market and have come to the conclusion that LIC's IPO is being launched. This is the right time for it.

 

 

Desire to launch before 12th May

 

According to the report, LIC's IPO is the biggest ever in the country and the government intends to launch it before May 12. If the government delays more than this, then it will have to submit the documents afresh with the market regulator SEBI. It is worth noting that earlier preparations were being made to present the IPO of LIC by 31 March. But after the start of the war between Russia and Ukraine, taking cognizance of the turmoil in the stock markets around the world including India, the government thought it right to postpone it. In this regard, Finance Minister Nirmala Sitharaman said that the government is monitoring the market conditions and it will be launched at the right time.

 

10% share for policyholders

 

Significantly, the government wants to sell its five percent stake in the country's largest insurance company. As per LIC documents, a portion of LI's IPO will be reserved for anchor investors. Apart from this, up to 10 percent of the LIC IPO issue size may be reserved for policyholders and five percent for employees. The government has a 100 percent stake in LIC i.e. 632.49 crore shares. The face value of the shares of the company is Rs 10. Let us tell you that this IPO of LIC will be the biggest in the history of the country so far.

 

Offer for Sale IPO

 

This IPO of LIC will be the biggest IPO to date. As per the DRAP submitted to SEBI, the issue of LIC will be purely offered for sale. In this, the government will issue 31.6 crore shares under its 5 percent stake. According to the report, the embedded value of the company will be Rs 5.4 lakh crore. Normally the market cap of an insurance company is four times this value. According to this, the market value of LIC will be $ 288 billion i.e. about Rs 22 lakh crore and LIC will become the largest valued company in the country.

 

20% FDI allowed

 

It is worth noting that in the cabinet meeting held recently, a big decision was taken regarding LIC IPO. FDI was allowed in IPO-bound LIC. In the meeting, approval was given for foreign direct investment (FDI) up to 20 percent in LIC through the automatic route. After this decision, the way for foreign investment in the proposed IPO of LI has been opened.

 

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