LIC IPO: Govt likely to sell 5.5-6% stake

The Centre will likely supply to sell a 5.5-6% stake within the closing supply doc for the mega IPO of Life Insurance Corporation (LIC), as a substitute of 5% indicated earlier, a senior official instructed FE. The problem is likely to hit the market in “two to three weeks”, he added.

With the stock market stabilising and international buyers shedding their publish Ukraine-Russia battle fears, the federal government is optimistic that the transaction will sail by way of easily in April, as they there may be loads of urge for food for the insurance coverage behemoth amongst institutional and retail buyers, the official mentioned.

With the embedded worth (EV) of LIC estimated Rs 5.4 trillion, a 5.5-6% stake might fetch the Centre Rs 70,000-80,000 crore as in opposition to the complete FY23 modest disinvestment income goal of Rs 65,000 crore.

Merchant bankers to the IPO have been requested to get quotes from potential anchor buyers together with sovereign wealth funds with regard to how a lot they’re keen spend money on the IPO and at what worth in per week’s time, one other official mentioned. A pre-IPO placement of shares will likely be executed in favour of anchor buyers earlier than the IPO opens for public subscription, setting the stage for pricing of the difficulty.

The market volatility after the outbreak of the Ukraine-Russia battle had pressured the federal government to review the proposed LIC IPO’s earlier scheduled for March, on considerations that international buyers and retail buyers could avoid the difficulty.
According to market regulator Sebi’s norm, a company can improve supply dimension by 50% within the closing supply stage vis-a-vis the indicated problem dimension within the draft prospectus.

The 30-share BSE Sensex darted up 1,335.05 factors, or 2.25%, to shut at an over two-month excessive of 60,611.74, virtually close to to the lifetime excessive of 61,765.59 reached on October 18, 2021.

“The issue size may be increased from 5% to 5.5-6% even though we have the scope to raise it to 7.5%. We want to be a little conservative,” the official mentioned.

LIC has reserved 50% of the online supply for certified institutional patrons or QIBs, 15% for non-institutional bidders and 35% for retail particular person bidders in accordance with the Sebi rules. Foreign institutional buyers would come within the QIB portion. According to norms, about 60% of the QIB portion may be allotted to anchor buyers, giving confidence to retail and different buyers to take part within the problem.

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