LIC’s initial public offering (IPO) has received a nod from market regulator the Securities and Exchange Board of India (Sebi). The approval was granted within 22 days of filing draft red herring prospectus (DRHP) by the country’s largest insurer, Sebi, according to a Business Today report.
IPO approvals are valid for a period of 12 months from the date of final observation by the Securities and Exchange Commission of India, as per a Reuters report.
The government has plans to sell 5 per cent of LIC’s stake this month before the financial year ends on March 31. The offering is seen as critical to the government’s plan to raise funds for budgeted spending.
Through the IPO of Life Insurance Corporation (LIC), the government aims to garner over Rs 60,000 crore in the current fiscal to meet its revised disinvestment target of Rs 78,000 crore.
LIC IPO TO BE POSTPONED?
Sebi’s approval comes in the wake of reports that the initial share sale was set to be delayed to next financial year due to market volatility stoked by the Ukraine crisis.
Reuters reported earlier, citing sources, that bankers advising LIC had pushed the government to defer the launch of the stock offering.
Global markets including India have become extremely volatile after Russian President Vladimir Putin authorised what he called a “special military operation” on Ukraine.
RUSSIA-UKRAINE WAR IMPACT ON LIC IPO
Last week, DIPAM Secretary Tuhin Kanta Pandey said that while the government’s desire is to come out with the Initial Public Offer (IPO) of the state-owned life insurer in the current fiscal, it is a “dynamic situation”.
However, in the wake of the market volatility due to the ongoing Russia-Ukraine war, there might be a rethink on the timing of the LIC share sale.
“There are certain unanticipated events which have taken over right now. We are closely watching the market and certainly whatever the government will do, we will do in the best interest of the investors and also the IPO,” Pandey, Secretary of Department of Investment and Public Asset Management (DIPAM), said.
Speaking at the seventh National Conference on Economics of Competition Law, 2022, he also said the government’s desire to come up with the IPO of the state-owned insurer this fiscal year itself.
“That is always been our desire, but now with this crisis which has come up, it is also a very dynamic situation. We are closely watching (the situation) and since you know you are dealing with the market all the time, so we have to be watchful and make our strategy accordingly,” Pandey stressed.
He also said the government is guided by professional advisors and whatever decision is taken, it will be in the best interest of the investors and the stakeholders.