LIC IPO Delays, Govt says Holding in Last Quarter of Fiscal

21 December 2021
3 mins read
LIC IPO Delays, Govt says Holding in Last Quarter of Fiscal

Looking at recent events, the Indian Government may have to delay its plans for an Initial Public Offering of Life Insurance Corporation of India (LIC). One probable reason for this delay is that this company’s valuation is taking a lot of time.

Meanwhile, there is a lot of preliminary work that this company is yet to complete. Hence, it is unlikely that this IPO may launch in the last quarter of this fiscal.

Let’s proceed to find more details on this matter!

Key Highlights Regarding the LIC IPO

  • LIC is planning to sell a 10% stake. Moreover, it is looking to get listed on the National Stock Exchange and Bombay Stock Exchange.
  • The Indian Government is planning to raise funds amounting to Rs. 80,000 crores to Rs. 1 lakh crores through this IPO and achieve its divestment target.
  • Delay in this IPO is largely due to some regulatory processes that are in place and the all-important valuation of this company that is yet to be calculated.
  • Moreover, officials such as Tuhin Kanta Pandey (DIPAM Secretary) have tweeted that the IPO is on course and will be held in the February-March 2022 cycle.
  • SEBI (Securities and Exchange Board of India) and IRDAI (Insurance Regulatory and Development Authority of India) need to vet this initial public offering.However, the IRDAI has been without a head for seven

Some reasons why the LIC valuation is taking so long are:

  • Large size of this company
  • Real estate assets
  • Subsidiaries
  • Product mix of the company
  • Profitability sharing structure

The share sale size depends largely on the valuation of this company. Many regulatory procedures are yet to be completed. Owing to the large size of Life Insurance Corporation, these procedures will also take some time.

The Indian Government aims to meet its disinvestment goal of Rs. 1.75 lakh crores with this public issue. Moreover, it has made several amendments to the LIC Act to speed up the process of this initial public offering.

Bottom Line

LIC’s IPO can be an excellent long-term investment option for retail investors as well as its employees. Moreover, one can also make quick gains on listing day. Therefore, watch out for this initial public offering set to hit in the last quarter of the financial year 2021-2022.

Frequently Asked Questions

  1. What will India’s Central Government’s stake be after this IPO?

Ans. Indian Central Government plans to hold at least a 75% stake in the LIC IPO and around 51% post the 5-year mark after the completion of the IPO.

  1. How much of the IPO will be reserved for policyholders?

Ans. Around 10% of the issue size will be reserved for policyholders.

  1. What is the estimated market capitalisation?

Ans. The estimated market cap of LIC is likely to be Rs. 8-10 lakh crores.

Disclaimer: This blog is exclusively for educational purposes and does not provide any advice/tips on investment or recommend buying and selling any stock.