LIC IPO: Government likely to cut size from 5% to 3.5%
By Team Newsable | First Published Apr 24, 2022, 10:21 AM ISTNotably, the LIO IPO would contribute significantly to the divestiture profits projected for the current fiscal year. The government expects divestment proceeds to reach Rs 65,000 crore in 2022-23, up from Rs 13,531 crore in the previous fiscal year.
The government is expected to dilute 3.5 per cent of its stock in Life Insurance Corporation of India in the impending initial public offering, rather than 5 per cent, according to reports. According to a source close to the situation, the government is looking to raise Rs 21,000 crore by selling 3.5 per cent of its ownership in the insurance behemoth. The government, which controls LIC entirely, is aiming for a valuation of Rs 6 trillion by asking for Rs 21,000 crore for the updated stake on the block.
Notably, the LIO IPO would contribute significantly to the divestiture profits projected for the current fiscal year. The government expects divestment proceeds to reach Rs 65,000 crore in 2022-23, up from Rs 13,531 crore in the previous fiscal year.
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In February, LIC submitted draught filings with SEBI, stating that the government intends to sell a 5% interest, or 31.6 crore shares, in the state-run insurer. However, the IPO preparations were hampered by the continuous volatility in stock markets as a result of the Russia-Ukraine conflict, prompting the government to reduce the offering size to 3.5%.
Also Read | LIC IPO: Govt likely to launch in last week of April
The government, which had positioned the sale as the first and largest in a series of privatisations aimed at replenishing state coffers, sees the sharp reduction in goals for the IPO - which would still be India's largest to date - as a setback.
According to investment banking sources, the LIC IPO would most likely be launched in the first week of May. With over 280 million policies, the 66-year-old firm leads India's insurance market. In 2020, the most recent year for which figures are available, it was the fifth-largest worldwide insurer in terms of insurance premium collection.
Also Read | Govt okays 20 percent foreign investment in LIC ahead of mega IPO
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