Government to dilute 3.5% stake in LIC at the IPO, instead of 5%

The government is likely to dilute 3.5 percent of its stake in Life Insurance Corporation of India in the upcoming initial public offering, instead of 5 percent, reports said.

The government is seeking Rs 21,000 crore by selling 3.5 percent of its stake in the insurance behemoth, an official privy to the development told news agency PTI.

By seeking Rs 21,000 crore for the revised holding on the block, the government, which wholly owns LIC, is targeting a valuation of Rs 6 trillion.

The listing is expected to hit the markets in the first week of May and details on reservations, discount, issue date and price is likely to be announced by April 27, sources told Reuters.

"There is absolutely no demand in the market right now for IPOs. Considering the volatility in the market, investors are continuing to remain cautious. At such times doing a higher stake sale does not make sense," Reuters quoted an investment banking source as saying.

Notably, the LIO IPO would contribute a major chunk to the budgeted divestment proceeds in the current fiscal year. The government has pegged divestment receipts at Rs 65,000 crore for 2022-23, up from Rs 13,531 crore last fiscal.

In February, LIC had filed draft papers with Sebi wherein it had said that the government will sell 5 per cent stake or 31.6 crore shares in the state-run insurer. However, the IPO plans faced headwinds due to the ongoing volatility in stock markets due to Russia-Ukraine war, forcing the government to cut the issue size to 3.5 per cent.

Reservations for policyholders and employees, and discounts, issue dates and issue price will be known by April 27, PTI learnt from the official privy to the development.

With inputs from agencies