“This, however, would be subject to regulatory approvals,” said one of them, adding that reservations for select categories, discounts, issue date and pricing will be finalised by Wednesday. The company is likely to be valued at Rs 6 lakh crore and a 3. 5% dilution will mean an offer size of Rs 21,000 crore. Earlier estimates had pegged the IPO issue size at Rs 60,000-63,000 crore. However, with markets turning choppy, there is a sense that a bigger issue would be difficult to sell.
ET, in its Saturday edition, had reported that the government would approach the Securities and Exchange Board of India (Sebi) to seek permission for a smaller issue size. Sebi’s public offer rules mandate that if the post-issue capital of a company calculated at the offer price is above Rs 1 lakh crore, it’s required to issue shares worth Rs 5,000 crore and 5% of equity.
The LIC offer will be the first one to hit the market after the rule for large offers was put in place last year. The government will need an exemption from the rule for offering less than the threshold level. The Draft Red Herring Prospectus had proposed a 5% equity dilution.
The government has decided to move forward with the listing but with a reduced size in view of market volatility after discussions with all stakeholders.
Officials said the listing of the state-owned insurer is important to broaden people’s participation and to ensure that the expectations of domestic investors on the proposed offer are met. Moreover, it was felt that any further delay in the IPO could push it back indefinitely, as volatility could persist, with the US Federal Reserve raising interest rates and geopolitical tensions escalating.
LIC’s IPO was initially planned for March but was postponed because of market volatility after Russia invaded Ukraine at the end of February.
