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Why Samir Arora thinks LIC IPO is fairly valued but Thomas Isaac doesn't

Why Samir Arora thinks LIC IPO is fairly valued but Thomas Isaac doesn't

Why Samir Arora thinks LIC IPO is fairly valued but Thomas Isaac doesn't
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By Abhishek Jha  Apr 26, 2022 2:47:50 PM IST (Published)

There is a debate about the upcoming LIC IPO's revised valuation. Thomas Isaac, the former finance minister of Kerala is of the opinion that the government is rushing ahead while market veteran Samir Arora of Helios Capital believes that the revised picture finally makes the insurance behemoth's market debut investible.

Even though there is political criticism of the new LIC IPO valuation and dilution, market participants say that they are now finally excited to participate.

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Thomas Isaac of the Communist Party of India, who served as the finance minister of Kerala, questioned the market debut rush by tweeting with the hashtag "Save LIC".
However, Samir Arora, founder and fund manager at Helios Capital, finds the insurance behemoth's market debut investable now.
“LIC, we have to consider now. LIC now has really come at a price where it looks that the government wants to do a deal," he said in an interview with CNBC-TV18, adding, "The amount is at an absolute low. It will not be an overhang on the market, which is what I thought previously," he added.
According to CNBC-TV18 research, initially, when the IPO was being worked out, the valuation was pegged at Rs 10.8 lakh crore but it is now down to Rs 6 lakh crore in terms of market cap. Similarly, dilution was earlier at 5 percent and has now been revised to 3.5 percent.
Arora went on to explain why he was not considering entering the IPO as an anchor investor. The fund manager reasoned that the cost of borrowing to be an anchor investor leaves little room to play with.
"We are not trying for anchor listing because now it has become more complicated, 3 months lock up and all that. It’s just easier to apply. These issues nowadays are not going to get oversubscribed 30 and 40 times, maybe they get oversubscribed 10-15 times," he said.
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