LIC IPO: Modi government eyes Rs 20,000 crore from big investors

The officials say that the pre-placement to large investors is expected to be between Rs 15,000 crore and Rs 20,000 crore.
LIC building in Chennai. (File Photo| PTI)
LIC building in Chennai. (File Photo| PTI)

NEW DELHI:  The government is considering the proposal to allow 15% share of Life Insurance Corporation of India to large institutional investors ahead of the mega IPO of the state-run insurance company. 

“The IPO process of the LIC is on the track. One of the proposals is to allow at least 15% of the offer to large cornerstore investors, foreign portfolio investors, and institutional investors as a pre-IPO placement. The proposal is under examination,” a senior official under the finance ministry told TNIE.

While the exact valuation of the IPO is yet to be arrived, the officials have maintained that the government is eyeing at least Rs 1 lakh crore from the LIC IPO. The officials say that the pre-placement to large investors is expected to be between Rs 15,000 crore and Rs 20,000 crore.

“Pre-placement is a common route, but so far, government-owned companies have not opted for this route. While exact valuation can be decided at a later stage, a rough initial estimate suggests that even by the conservative estimate, it can easily get Rs 15,000-20,000 crore,” the official added.

The official also added that the government has sought clarification whether RBI will allow industrial houses to participate in the stake sale process of even IDBI Bank, ahead of issuing a Request For Proposal (RFP).

“LIC’s stake in IDBI will be sold together with GoI’s shareholding, expected to be completed by January. The ministry has requested the RBI to allow industrial houses to participate in divestment. We are waiting for its nod. IDBI divestment is crucial as LIC IPO will proceed only after that,” the official added.

Earlier, the government had selected 10 merchant banks including Goldman Sachs, JP Morgan, Citigroup, Nomura, Bank of America Securities, JM Financial, SBI Caps, Kotak Mahindra Capital, ICICI Securities and Axis Capital to manage the IPO of LIC. 

Milliman Advisors LLP India is hired to assess the embedded value of LIC, while Deloitte and SBI Caps will be pre-IPO transaction advisors.

Rs 1 lakh crore Total expected amount to be raised from IPO.

Rs 20,000 crore Estimated to be raised through pre-placement.

15% Of the offer to be allowed for large investors.

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