NEW DELHI: The Government is likely to offload 7-10% stake in the much-awaited Life Insurance Corporation of India (LIC) initial public offering (IPO), a top official told The New Indian Express. It is hoping to raise up to Rs 65,000 crore through this IPO, which will likely be launched in May, he further added.
“We will dilute only a small stake between 7 to 10% in LIC. The IPO launch will likely take place before May 12 when the approval from the market regulator, the Securities Exchange Board of India (SEBI) will expire,” the official said. The government had earlier said that it would offer only 5% of LIC shares to the public in the forthcoming IPO.
Explaining why the government is not selling a larger portion of the equity in LIC, the official said,“We can’t take a risk of offering a larger chunk to the public as it would suck liquidity from the market. Situation is already very unpredictable right now due to the Russia-Ukraine crisis. Also, the Coronavirus has not completely faded from the country.”
The government will have to file the fresh documents with the markets regulator SEBI, in case it fails to roll out the IPO before May 12. Meanwhile, the sources said that the Centre is in talks with the financial advisers to decide on the price bands and share lots.
The Finance Ministry had previously planned to roll out the IPO by March 2022 but due to geopolitical tensions, it had to defer its plan. When asked about the impact of the pandemic on LIC IPO, one of the government officials said, “Now that the pandemic is under control, we hope that the disinvestment process will get back on track. We don’t want to further delay the LIC IPO.”
Meanwhile, with regard to the delay in BPCL's strategic disinvestment, the official said the Covid pandemic derailed the Government’s plans. He added that the disinvestment process for BPCL would now be reinitiated only after the Russia-Ukraine crisis will be over. For the current fiscal, the Centre has set a disinvestment target of Rs 65,000 crore.