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LIC IPO: DRHP would be filed by November

October 16, 2021 11:00 AM

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LIC IPO likely by Fourth Quarter of this Year, Quota for Policyholders, Key Updates So Far

Country’s largest insurer LIC is likely to file draft papers with Sebi by November for the largest IPO in country’s history, a finance ministry official has said. “We target to bring the IPO within this fiscal and we have set strict timelines. The DRHP would be filed by November,” the official told PTI.

The government last month appointed 10 merchant bankers, including Goldman Sachs (India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd to manage the mega initial public offering of country’s largest insurer LIC.

Other selected bankers include SBI Capital Market Ltd, JM Financial Ltd, Axis Capital Ltd, BofA Securities, J P Morgan India Pvt Ltd, ICICI Securities Ltd, and Kotak Mahindra Capital Co Ltd.

The IPO is crucial for the government because it would make up the bulk of its plans to raise 1.75 trillion rupees through asset sales in the current fiscal year.

LIC IPO likely by Fourth Quarter of this Year, Quota for Policyholders, Key Updates So Far

Two important updates have come pertaining to the much-awaited initial public offering (IPO) of Life Insurance Corporation (LIC) of India. First, the central government has shortlisted Cyril Amarchand Mangaldas for offering legal advice on upcoming mega IPO of India’s largest insurance company. Secondly, Chief Economic Adviser Krishnamurthy Subramanian exuded confidence that the LIC IPO will hit the market by the “fourth quarter of this year”.

“Government has finalised the book running lead managers and some other advisors for the IPO of LIC,” DIPAM Secretary Tuhin Kanta Pandey tweeted few days back.

According to media reports, the government will reserve 10 per cent of the issue size would be reserved for the policyholder. There could be a discount on the floor price too. At present, LIC policyholders have bought 289 million policies.

In the Union budget of 2020-2021, Finance Minister Nirmala Sitharaman first mooted the idea of LIC’s IPO. The government intends to divest its stake in the state backed Life Insurance corporation almost by 10 per cent. The government is seeking a valuation of between Rs 8 trillion (USD 109 billion) and Rs 10 trillion for the LIC. With this valuation, this can be dubbed as the nation’s biggest initial public offering. In the budget of 2021-2022, the government set the divestment target of Rs 1.75 lakh crore and thus to realize the target the government is actively pushing for the divestment of LIC. According to experts, LIC is key to achieve the divestment target.

Also Read: India likely to block Chinese investment in mega LIC IPO

LIC IPO Date 2021 News

Chief Economic Adviser Krishnamurthy Subramanian said on Saturday that Budget 2021 has Rs 1.75 lakh crore as the ‘proceeds’ from ‘privatisation’. He said that authorities were confident that LIC’s listing should take place by the fourth quarter of this year.

Meanwhile, four law firms  Crawford Bayley, Cyril Amarchand Mangaldas, Link Legal and Shardul Amarchand Mangaldas & Co  had made presentations before the Department of Investment and Public Asset Management (DIPAM) on September 24, as per a PTI report.

Following presentations, Cyril Amarchand Mangaldas has been selected as legal advisor for the initial public offering (IPO) of Life Insurance Corporation (LIC), the official told PTI.

The listing of LIC will be crucial for the government in meeting its disinvestment target of Rs 1.75 lakh crore for 2021-22 (April-March). So far this fiscal, Rs 9,110 crore has been mopped up through minority stake sales in PSU and sale of SUUTI stake in Axis Bank, as per the PTI report.

Fundraising through IPOs is expected to go up in October to November period, with at least 30 companies are looking to collectively raise over Rs 45,000 crore through initial share-sales, PTI reported quoting merchant banking sources.

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