Highlights
• LIC will list on the exchanges on May 17
• The issue will open for subscription on May 4 and will close on May 9
LIC, India’s largest insurer, will list on the stock exchanges on May 17 and is expected to raise Rs 20,558 crore by diluting 3.5 percent of its stake in its initial public offering. The issue will go on sale on May 4 and will close on May 9. The insurer announced on Wednesday that the issue’s anchor book will open on May 2.
Overview
The government is selling 221.3 million shares through the offer, valuing the insurance behemoth at nearly Rs 6 trillion based on the offer’s upper price band.
During an analyst call, some market experts predicted that such a limited dilution would result in a demand-supply mismatch following the listing, resulting in a sharp increase in the stock’s price. A limited free float will assist the insurer in obtaining a higher valuation in its subsequent follow-on offer.
During the analyst call, government representatives stated that the anchor book is strong because bankers have been working on it for some time.
Given the volatility in the equity markets and the low demand from foreign investors, the issue size was reduced from nearly Rs 60,000 crore to nearly Rs 21,000 crore at the time of filing the final documents. The government, on the other hand, anticipates strong demand from retail investors in the country’s largest IPO.
TuhinKantaPandey, secretary of the Department of Investment and Public Asset Management (DIPAM), stated that despite the size reduction, the LIC IPO will remain India’s largest public offering.
“The LIC IPO is the right size for the capital market environment, and we anticipate significant retail participation.”
Given the current environmental constraints, the IPO will not crowd out capital and monetary supply,” Pandey said at a press conference here on the 27th of April.
To increase demand, the government is selling shares at a lower price than other private players. Due to geopolitical concerns and other global factors, valuations were reduced after taking feedback from investors and current market conditions into account.
Pandey stated that the valuations are “fair and attractive,” and that the decision was made during a drop in volatility and strong domestic flows. “Valuation is based on the circumstances and the need for listing,” said MR Kumar, chairperson of LIC.
