The IPO of Life Insurance Corporation of India (LIC) will now come in April instead of March. Three officials with knowledge of the matter informed about the change in the plan. Due to the ongoing unrest in the market, the government is being forced to think of going ahead with the biggest IPO in the country. Officials, speaking on condition of anonymity, said the center is closely watching market volatility, and investor interest will be the key deciding factor for the timing of the IPO.
The sentiments of investors will be taken into account
The government is planning to sell 5% of its stake in the insurer through an offer for sale (OFS) and its valuation is up to Rs 75,000 crore. “We will try to bring LIC’s IPO next month, probably by the end of April,” he said. We don’t want to delay it any longer. We have time till May 12. The second official said that the volatility in the last week was less compared to the previous month when the Indian market also saw a sharp decline in global indices; However, the sentiments of institutions and retail investors have to be kept in mind before proceeding with the IPO.
Keeping a close eye on the market
“We are looking at the VIX (India Volatility Index) for certainty in stability, and the market will have to be good before we move forward, but the March 31 deadline is not a good one now,” the source said. Big investors will have to pay the cheque, they have to be on board but a large part of the IPO is for retail investors and needs to be fully subscribed, which means a large number of people will invest in it. Post-listing volatility in share prices may frustrate retail investors. The source says, the government would like to avoid such a situation. Existing demat account and buy LIC shares.
For policyholders 10% of the total shares of LIC
Mint had earlier reported that PANs of at least 70 million policyholders have been matched with LIC policies and linked to demat accounts. Out of this, at least 45 million policyholders have got new PAN numbers to be able to invest in LIC IPO. 10% of the total shares of LIC for retail investors will be reserved for policyholders, and they are likely to get a discount of 10% on the IPO price. A third official said the government is keen to launch an IPO early next financial year. “We will try to do it before May.”
LIC’s IPO approved in record 22 days
However, SEBI approved the IPO of LIC in a record 22 days. The government requires a minimum of 15 days to sign on anchor investors before opening the sale for retail investors and policyholders and the delay will push the IPO to next month. Shifting the IPO to April will impact the government’s asset sale target and impact the fiscal deficit target. The success of LIC’s IPO is crucial for the government to meet its asset sale target.