SEBI Gives Approval To Launch Much Awaited LIC IPO

Market regulator Securities and Exchange Board of India (SEBI) has approved launch of LIC IPO which has been on the eye of institutional and retail investors for a long time now. The report given by ET says that an observation letter has been issued and approval has come from SEBI in just 22 days of filing.

Life Insurance Company filed papers with SEBI last month in February. The issue will sell 31,62,49,885 equity shares by government of India which currently holds 100% stake in the company. 50% of the net issue will be reserved exclusively for all qualified institutional buyers and non institutional buyers will only have 15% shares for them to buy. For retail investors a sum of 35% has been secured.

LIC Officials told Business Today that, “”LIC December quarter results have been audited, will be added in the RHP when it is released. All planned roadshows are almost complete, has not been impacted by the current geopolitical situation.”

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LIC IPO issue will also have reservations for eligible employees and policyholders of the company according to Draft Red Herring Prospectus (DRHP). One third of the lot will be reserved for domestic mutual funds.

But government is planning not to launch LIC IPO in current financial year due to instability within the market from Russia Ukraine Conflict. When situations get stable government might think to launch IPO in next financial year which starts from April 1, 2022. The government will sell 5% stake in the insurance tycoon which will fetch Rs 60,000 crore to exchequer.

Once the approval is acquired from SEBI, it remains valid for a period of 12 months from the date of final observation. Edelweiss said, “Even as its embedded value (EV) has shot up, LIC’s RoEV (10-12 per cent) is sub-private peers (18-25 per cent). This along with a high par skew, market share loss (individual segment) and a PSU badge calls for a discount to private peers. And competition and profitability squeeze overhang the sector at large, not to mention stake sale uncorking a huge supply.”

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Siddhant is a Content Creator. He has been doing this for past three years and have managed to gain good attention of audiences for his work. He is an active reader and has huge respect for art and theatre.

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