The LIC Board of Directors has approved the reduction of the initial public offering (IPO) from 3.5% to 5%
New Delhi:
The LIC board has approved a reduction in the size of its initial public offering from 5% to 3.5%, the sources said. The government will now dilute its 3.5% stake in the LIC for Rs 21,000 crore, subject to approval by the capital markets regulator Securities and Exchange Board of India, or SEBI.
In the draft red herring prospectus, the government proposed selling 5% of its equity. This would value LIC at Rs 6 trillion.
Earlier government estimates called for the insurer to be valued at around Rs 17 trillion.
Downsizing its IPO ambitions – which remains India’s biggest to date – is seen as a setback for the government, which has seen the deal as the first and largest in a wave of privatizations aimed at privatization. supplement the state treasury.
“Investors have become very risk-averse over the past few months. After the roadshows, we realized there was no point in offering a high valuation. said an unnamed source.
Investment banking sources told Reuters.
Originally, the government wanted to list the LIC for the last financial year ending March 31, but had to delay the sale after Russia’s invasion of Ukraine caused a market shift.
The 66-year-old company dominates India’s insurance sector with more than 280 million policies. It is the fifth largest insurer globally by premium collection in 2020, the latest year for which statistics are available.
Investors are concerned that LIC’s investment decisions, including those in loss-making state-owned companies, could be influenced by government requirements.
