LIC IPO launch likely in mid- or end-April; decision may come soon

Dipam deems situation suitable for listing

Government officials have suggested mid- or end-April dates to the top ministers’ panel for the IPO of the Life Insurance Corporation of India (LIC). The ministers’ panel comprises Finance Minister Nirmala Sitharaman and Road, Transport and Highways Minister Nitin Gadkari.

The panel is likely to make its decision soon and give a go-ahead to officials to prepare for the launch of the initial public offering (IPO).

The Department of Investment and Public Asset Management (Dipam), along with government-appointed intermediaries, conducted market assessment and concluded that the present situation was suitable for the listing of India’s largest insurer. The listing plan was derailed earlier due to the volatility in markets over the Russia-Ukraine war.

The government is looking to launch India’s largest-ever listing before May 12, as a delay would require LIC to make fresh filings with the Securities and Exchange Board of India (Sebi) and will have to derive the insurer’s embedded value again.

Based on Dipam’s assessment, the government would require a 10-day window to complete further filings with the regulator, and announce the issue. The red herring prospectus (RHP) would include all details related to the IPO, and is likely to increase the number of shares to be sold through the IPO from 316 million announced earlier.

Anchor investors would need to be given 3-4 days to arrange funds, and that will be considered before announcing the dates, an official said.

Dipam has also asked merchant bankers to seek feedback from anchor investors on the valuation at which they would participate in LIC’s IPO, and provide suggestions on the value at which the government should sell its stake in the insurer by Monday.

Preparations for an April launch are underway, and the launch being pushed to May is unlikely, the official added. The volatility in the market has dropped from the levels that were seen in March soon after Russia attacked Ukraine. The India VIX index, an indicator to assess market volatility, closed at 17.69 on Friday, down from a peak of 29 recorded in March. A reading of 14-15 indicates normalcy.

There are also indications that foreign investors are making a comeback in Indian equity markets after the US Fed rate hike led to funds being pulled out.

To nudge policyholders to avail of the 10 per cent reservation earmarked for them, LIC on Sunday issued advertisements in English dailies to publicise the criteria for policyholders eligible for the issue.