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    Govt likely to launch LIC IPO in May first week, minimum issue size at Rs 21,000 crore with 3.5% sale offer

    Govt likely to launch LIC IPO in May first week, minimum issue size at Rs 21,000 crore with 3.5% sale offer

    Govt likely to launch LIC IPO in May first week, minimum issue size at Rs 21,000 crore with 3.5% sale offer
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    By Sapna Das   IST (Updated)

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    The government has also proposed to trim the basic offer size of the LIC IPO to Rs 21,000 crore with a minimum 3.5 percent stake dilution on an estimated Rs 6 lakh crore market capitalisation of LIC. The proposal is also subject to SEBI approvals. As per SEBI mandate a govt owned company needs to dilute a minimum of 5 percent for an IPO.

    The Life Insurance Corporation (LIC) of India will most likely to launch its IPO in May first week, government sources privy to the developments told CNBC-TV18.
    The government has also proposed to trim the basic offer size of the LIC IPO to Rs 21,000 crore with a minimum 3.5 percent stake dilution on an estimated Rs 6 lakh crore market capitalisation of LIC. The proposal is also subject to SEBI approvals. As per SEBI mandate a govt owned company needs to dilute a minimum of 5 percent for an IPO.
    However, government officials tell CNBC-TV18 that the issue size could have an upward bias and may even expand up to Rs 30,000 crore. On being asked will there be a green shoe, government officials told CNBC-TV18, "No, in IPO, it operates differently. If the offer is increased upwards, it will be accordingly announced prior to issue."
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    Sources in the know told CNBC-TV18 that the LIC board is meeting today (April 23) to approve the issue size. Reservations, discounts, issue dates, and issue price will be known by Wednesday morning (April 27), government sources close to the development said.
    In February, LIC had filed draft papers with Sebi wherein it had said that the government will sell a 5 percent stake or 31.6 crore shares in the state-run insurer.
    However, the IPO plans faced headwinds due to the ongoing volatility in stock markets due to the Russia-Ukraine war, forcing the government to cut the issue size to 3.5 percent. Reservations for policyholders and employees, and discounts, issue dates, and issue price will be known by Wednesday, the official added.
    As per the draft prospectus, LIC's embedded value, which is a measure of the consolidated shareholders' value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors. Although the DRHP does not disclose the market valuation of LIC, as per industry standards it would be about 3 times the embedded value.
    So far, the amount mobilised from the IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
    The government, however, did not disclose in the DRHP the discount that will be given to policyholders or LIC employees in the public offering. As per norms, up to 5 percent of issue size can be reserved for employees and up to 10 percent for policyholders.
    During the current financial year so far, Rs 12,423.67 crore has been obtained through OFS, employee OFS, strategic disinvestment and buyback.
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