NEW DELHI: In less than a month since filing its draft paper, capital market regulator SEBI has approved the public listing of Life Insurance Corporation of India (LIC), sources aware of the development told TNIE. Now that the state-owned firm has received the approval, it can launch its initial share sale and become a publicly traded company.
The final observation for the public issue of LIC, which had filed its DRHP on February 12, was issued on Tuesday evening. The regulator will formally disclose the information soon. While the Government of India was expecting to launch its IPO by March 31 to meet its revised divestment target for FY2022, there are strong chances that the offering might get delayed to next fiscal due to the ongoing Russia-Ukraine conflict. Russia’s invasion of Ukraine has increased volatility on the equity market worldwide; forcing the government and the investment bankers to wait till the sentiment improves.
Benchmark indices Nifty and Sensex have plunged over 7% this calendar year amid a surge in global oil prices and rising concerns of inflation. India’s market has been hit particularly by the massive sell-off by foreign portfolio investors (FPIs) who have pulled out over Rs 1 lakh crore so far this year.
Analysts feel that the mega offering, which will be the largest in India’s capital market history, will test the depth of the Indian equity market, especially when the current biggest IPO (of Paytm) has bombed on the stock exchanges. Shares of Paytm, which came up with a Rs 18,300 crore IPO last year, have crashed more than 60%. There are also worries about the pricing of the IPO and the embedded valuation LIC is seeking.
The government, which holds a 100% stake in LIC, is looking to sell a 5% stake to raise between Rs 65,000 crore- Rs 80,000 crore through the IPO. Analysts say that if the IPO is priced at 2.5-3 times the embedded value, the IPO would be priced at around Rs 1,800-2,250, making its valuation too expensive.