India’s Biggest IPO Can Launch In Early May; Govt Will Sell 5% To Generate Rs 60,000 Crore+ Via IPO Sale

The Indian government is all set to launch the LIC IPO, according to the sources who said that the initial public offering (IPO) of the insurance behemoth is likely by early May.

Why The Delay ?

Earlier, state-owned Life Insurance Corporation (LIC) had filed an updated draft red herring prospectus (DRHP) for the IPO with the Securities and Exchange Board of India (SEBI). 

The government officials said that this updated DRHP for the IPO is based on LIC’s December financials.

On March 21, SEBI approved this updated DRHP.

But, during that time market experts said that since the IPO was not expected in the 2021-22 fiscal year, the DRHP would need to be updated again.

Now, again the government was in touch with bankers and advisors on the DRHP, said the sources.

Further adding, “The government may offer to sell more than 5 percent in LIC IPO, the negotiators are operating in a challenging environment.”

LIC received SEBI’s go-ahead to raise funds through an initial share sale in March. 

Initially, the IPO launch was planned for March, but the highly volatile stock markets due to the Russia-Ukraine crisis have derailed the plans.

Earlier reports suggested that the LIC was likely to issue its IPO in April, but now the timeline seems to be early May. 

Delayed IPOs

This delay is also affecting several other companies’ plans as they are waiting for the LIC IPO to get out of the way and have reportedly delayed their IPO plans. 

The firms like MobiKwik, GoFirst, Delhivery, Oyo, and PharmEasy are delaying their IPOs.

Coming to LIC’s offer in February, it is entirely an offer for sale (OFS) of 316,249,885 shares by the shareholder, President of India, acting through the Ministry of Finance, Government of India, As per the DRHP for the IPO.

The government is planning to sell 5 percent stake via this IPO.

So far, the government owns 100 percent in LIC, whose total equity is around 632 crore shares. 

This year, the center is targeting Rs 1.75 trillion receipts and had expected the completion of big-ticket privatization proposals. 

But, then the target was slashed to Rs 78,000 crore.

Basically, the sale of the government’s about 31.6 crore shares or 5 percent stake in LIC is estimated to fetch around Rs 60,000 crore to the exchequer.