India's markets regulator has cleared the initial public offering (IPO) application by India's largest and the only state-owned life insurer Life Insurance Corp of India or LIC, paving the much-awaited way for the government to earn from the divestment of 5% of its stake in the insurer.
Two persons with direct knowledge of the matter confirmed this on the condition of anonymity since the approval by the regulator is yet to be officially announced.
The insurer has received Sebi's approval in just 22 days and just after one round of clarification from bankers, despite the voluminous 650-page prospectus given for Sebi's scrutiny. The government plans to mop up Rs. 65000-80,000 crore from LIC's 5% stake sale via the initial public offering.
The government is still in the process of finalizing the date of the launch of LIC's public float.
Originally, the government aimed for the mid-March week to launch the IPO.
However, due to the turbulence in the equity market and jitter among global investors in the wake of the ongoing Russian invasion in Ukraine, the government is reportedly gone into a dilemma over the launch timing for the LIC IPO.
"The government is not certain at the moment whether to launch the IPO in March or to postpone it to mid-April. Expert committee meetings are on and a decision will be taken soon," said the first person.
The success of the LIC IPO is critical for the government to meet its asset sales goal, which has been slashed by more than half to Rs.78,000 crore for the current fiscal. In order to narrow the fiscal deficit, meeting the divestment target before March end will be important for the exchequer.
Efforts to ensure the success of the mammoth IPO are in full swing, with even the markets regulator nudging investment bankers not to crowd the market over the next few weeks, bankers said.
That said, few companies would need to be persuaded against going head-to-head with an 800-pound gorilla, the investment bankers added, referring to the staggering scale of the state-run insurance behemoth’s public offering.
