The government is ready to launch the LIC IPO, sources have told CNBC-TV18. The sources said the initial public offering (IPO) of the insurance behemoth is likely by early May.
Sometime back state-owned Life Insurance Corporation (LIC) had filed an updated draft red herring prospectus (DRHP) for the IPO with the Securities and Exchange Board of India (SEBI). The updated DRHP for the IPO is based on LIC's December financials, a government official told CNBC-TV18.
The updated DRHP was approved by the SEBI on March 21, but market experts had then said that since the IPO was not expected in the 2021-22 fiscal year, the DRHP would need to be updated again.
Now, sources have told CNBC-TV18 that the government was in touch with bankers and advisors on the DRHP.
"The government may offer to sell more than 5 percent in LIC IPO," sources have said, adding the negotiators are operating in a challenging environment.
In March, LIC received SEBI's go-ahead to raise funds through an initial share sale. The IPO launch was originally planned for March, but the Russia-Ukraine crisis derailed the plans as stock markets have been highly volatile.
It had been reported earlier that the LIC was likely to issue its IPO in April, but now the timeline seems to be early May. Several other companies that are waiting for the LIC IPO to get out of the way have reportedly delayed their IPO plans. Some of them include MobiKwik, GoFirst, Delhivery, Oyo, and PharmEasy.
As per the DRHP for the IPO in February, LIC's offer is entirely an offer for sale (OFS) of 316,249,885 shares by the shareholder, President of India, acting through the Ministry of Finance, Government of India. This means the government will sell 5 percent stake via the IPO.
The government owns 100 percent in LIC, whose total equity is around 632 crore shares. The government, while targeting Rs 1.75 trillion receipts for this year, had expected the completion of big-ticket privatisation proposals. The target was slashed to ₹78,000 crore.
The government’s sale of about 31.6 crore shares or 5 percent stake in LIC was estimated to fetch around Rs 60,000 crore to the exchequer.