LIC IPO: The government is considering reducing the size of the initial public offering in the market amid market volatility

The government may choose a smaller initial public offer (IPO) for Life Insurance Corp of India (LIC) than previously planned, concerned about investor response given market volatility and portfolio outflows, people familiar with the matter said.

There is no plan to delay the offer although it sees strong domestic appetite for the country’s largest life insurance company. They said he might seek a special exemption from the market regulator to sell less than the 5% of the stake proposed in the draft offer document required under the rules.

“We’ll get a balanced call. There are headwinds…but the emerging thinking is that the show should launch with a less ambitious lift,” a senior government official told ET. “The

Behind LIC’s IPO was getting people to be partners in the company, not a financial exercise.”



The final offer document will likely be presented next week after consultation with all stakeholders. Promotional tours of the show are currently ongoing.

then sibi

If commercial bankers suggest a smaller offer, the government will turn to the Securities and Exchange Board of India (SEBI) to reduce the size of the IPO.

Strong investor interest

Under the present rules, if the share capital of the company after the issue computed at the offer price is higher than Rs 1 crore, shares of Rs 5,000 crore and 5% equity should be issued.

If the supply is less than that calculated under this standard for large companies, the government will need a special exemption from Sebi. So far, no company has put forward an offer with the size of applying the rule, the official said, making the case for the exemption. Previous estimates put the size of the IPO issue at Rs 55,000-60,000 crore.

Officials feel that there is strong anticipation among local investors for LIC’s initial public offering and even a smaller issuance could pass in the current situation. There is also concern that markets may take a turn for the worse given the unstable geopolitical situation and rising interest rates in the US.

Rising inflation in India and rising rates have also dampened sentiment in India. This month, as of April 22, there was a net $2 billion outflow from the portfolio. For the 2022 calendar so far, foreign portfolio investors have sold $17.5 billion in net worth of shares in the Indian market.

ET previously reported that the government wants to complete the entire listing process before May 12. If the IPO is not completed before that date, the issue will be delayed for procedural reasons as the offering document will have to be updated with the latest financial statements, adding uncertainty and delaying the process.