The Life Insurance Corporation of India (LIC) is planning to buy shares in Zomato’s initial public offering (IPO) this week, according to a news report. If so, it will be seen as a big shift in LIC's investment pattern as the state-owned body usually puts money in the secondary markets or buys shares of ventures that are being privatised by the government.
The investment committee of the LIC will soon hold a meeting to take a final call on the plan to invest in Zomato’s IPO. The Hindustan Times report quotes an unnamed source, privy to the matter, saying that the growth of Zomato reflects India’s transition to the internet economy.
Zomato’s much awaited IPO is expected on July 14. It is being speculated that this will be the second-biggest IPO this year as the online food platform initially plans to issue shares worth Rs 9,375 crore at a price band of Rs 70-72 per share.
Market regulator Securities and Exchange Board of India (SEBI) had given its nod to Zomato, backed by China's Ant Group, to raise funds via an IPO. Ahead of the much-anticipated IPO rollout, Zomato's stocks are trading at Rs 78-80, around 12 percent above the projected IPO price of Rs 70-72, in the grey market, the unofficial market for unlisted shares.
In February this year, Zomato had raised $250 million (more than Rs 1,800 crore) in funding from Tiger Global, Kora, and other investors. After the last round of funding, Zomato’s value had touched $5.4 billion.
Meanwhile, LIC is also expected to roll out its IPO later this year. In fact, the company was to go for public listing last year but the IPO rollout was deferred due to the pandemic.
According to the latest amendment in market rules, LIC will only be able to sell five percent of its shares as its market capitalisation is more than Rs 1 lakh crore. However, the LIC would be required to increase its public shareholding to 10 percent in two years and to 25 percent within five years of the IPO rollout.
First Published: IST