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    LIC IPO: Govt to slash public offer valuation to woo investors, says report

    LIC IPO: Govt to slash public offer valuation to woo investors, says report

    LIC IPO: Govt to slash public offer valuation to woo investors, says report
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    By CNBCTV18.com  IST (Published)


    The government is scaling down the valuation it is seeking from the LIC IPO to Rs 11 lakh crore, down from Rs 16 lakh crore, amid a grim global market scenario.

    In a bid to woo investors amid a grim global market outlook, the Centre has decided to cut the public offer valuation it is seeking for state-run Life Insurance Corporation of India (LIC) by about 30 percent, a media report said.

    The government is now looking at seeking a valuation of Rs 11 lakh crore from the IPO of the country’s largest insurer. This valuation is a sharp fall from Rs 16 lakh crore valuation the government had initially planned to sell at, Mint reported, quoting two sources with direct knowledge of the matter.

    LIC’s public offer was expected to hit the market in March. However, the issue was delayed following Russia’s invasion of Ukraine, which rattled the global markets and left investors jittery. Markets also turned choppy on concerns over inflation and likely monetary tightening by central banks in India and in developed countries.

    The cut in valuation will help the government maintain a balance for first-time investors once the shares start trading. Many LIC policyholders have opened demat accounts with the hope of participating in the public issue, which is going to be the largest-ever in the country. The government also wants to ensure that these first-timers are not disappointed.

    Meanwhile, the board of the state-run insurer is likely to meet this weekend to finalise the results of the previous fiscal, following which it will file a revised public offer document with the market regulator by next week, The Economic Times reported.

    "Listing would be completed by May 12," the business daily quoted a government source as saying.

    The government had filed the draft papers for the IPO last month and has time till May 12 to launch the offer. LIC’s parent proposed to dilute a 5 percent stake in the insurer. However, if the response to the public offer is good, the Centre may offer another 2 percent. With the embedded value of the insurer estimated to be Rs 5.4 lakh crore, the government may raise Rs 60,000-70,000 crore through the LIC stake sale.

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