An $8 billion public offering of shares by India’s state-run Life Insurance Corp (LIC) is slated to open for anchor investors on March 11, according to three persons with direct knowledge of the situation. Other investors will be able to bid on the book a few days later.
PRICE BAND FOR THE LIC IPO
The initial public offering (IPO) of LIC is scheduled to get regulatory clearance by the first week of March, following which an indicative marketing price band will be established.
INDIA’S LARGEST IPO
The insurer’s IPO will be a litmus test for the depth of India’s financial markets, where equity deals for more than a couple of billion dollars are uncommon. Last year, payments startup Paytm had the largest IPO to date, valued at $2.5 billion.
The LIC offers could help calm investor desire for fresh stock offerings since a number of Indian businesses that floated last year are trading below offer prices due to concerns about expensive valuations and impending interest rate rises by central banks.
The IPO launch schedule may alter, but for the time being, the issuer was working hard to achieve those deadlines.
DETAILS ON THE LIC IPO
On Sunday, the country’s largest insurance business, LIC, released a draft IPO prospectus with the market regulator in order to sell 5% of the Indian government’s holding and possibly raise about $8 billion.
Last month, sources told Reuters that LIC might begin issuing public shares by mid-March. They didn’t go into detail.
The government is hurrying to complete the IPO by the end of March in order to satisfy its 2021-22 budget deficit target of 6.4% of GDP, which is predicated on generating 600 billion Indian rupees ($8.03 billion) from the offering.
New Delhi has reduced its divestment and privatization intentions for the fiscal year ending March 31 from 1.75 trillion rupees to 780 billion rupees.
So far, it has only raised 120 billion rupees by selling stakes in state-run enterprises such as Bharat Petroleum Corp Ltd and two banks.
Investor roadshows for the sale, which is expected to be the third-largest insurance IPO in the world at $8 billion, began earlier this week. The deal’s book running lead managers are SBI Caps, Citigroup, Nomura, JPMorgan, and Goldman Sachs, as well as five additional local and foreign investment banks.
The forthcoming LIC IPO has hammered shares in other listed Indian insurers as investors reduce their holdings to make room for the state-owned behemoth.
With over 280 million policies, the 66-year-old firm leads India’s insurance market. In 2020, the most recent year for which statistics are available, it was the fifth-largest worldwide insurer in terms of insurance premium collection.
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