LIC to File for its IPO in November 2021
According to media reports, there is now official Finance Ministry confirmation that LIC will file its draft red herring prospectus (DRHP) with SEBI in Nov-21 and the road shows for domestic and international investors will begin in Jan-22. DIPAM has already indicated that the IPO of LIC will be completed during the current fiscal year i.e. by March 2022.
LIC has already appointed 10 investment bankers for the issue, which includes 5 leading global names and 5 of the leading investment bankers from India. Amarchand Mangaldas has been appointed as the legal advisor while KFIN Technologies (formerly Karvy Computershare) will be the registrars to the LIC IPO.
Currently, there are two major items on the agenda pending. Firstly, the actuarial advisors to the issue, Milliman Advisors LLP have to submit their embedded valuation for LIC, which will be the basis for the pricing of the IPO. Secondly, LIC will have to seek approval for FPIs to invest in the IPO, since LIC is governed by a separate Life Insurance Corporation Act.
Normally, once the DRHP is filed with SEBI, the issuer has to await the comments of SEBI and then make changes or clarify matters as called for by SEBI. Once that is done, the IPO process starts with simultaneous filing of the RHP with the Registrar of Companies (ROC). DIPAM believes it is on track for a likely March listing of the LIC IPO.
The final price and the quantum to divest (between 5% and 10%) will determine the issue size. Markets are estimating the IPO size to be in the range of Rs.60,000 crore to Rs.75,000 crore. That would still make it the largest IPO in Indian history. In the next few months, Paytm is planning a Rs.16,600 crore IPO.
The success of the LIC IPO is the key to the government achieving its aggressive target of Rs.175,000 crore via disinvestments in FY22. Till date, just about Rs.9,110 crore has been raised this year via divestments and that too has predominantly come from SUUTI share sales. LIC IPO will also be a major test of the ability of Indian markets to absorb paper.
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