Tuhin Kanta Pandey, secretary of the department of investment and public asset management (DIPAM), on 27 April said the government expects significant retail participation for the public issue of country's largest insurer, Life Insurance Corporation of India (LIC).
The government has taken extensive feedback from merchant bankers to determine valuation, Pandey said speaking at a press conference in Mumbai on 27 April.
According to the DIPAM secretary, LIC valuation is “fair and attractive” and the decision to list LIC was after taking into account factors like market demand, reduced mkt volatility, domestic flows and LIC performance.
The decision to list Life Insurance Corporation of India (LIC) was taken after considering market demand, reduced market volatility and company's performance, Pandey said. Further, there is no plan to bring any follow on public offer (FPO) in the next one year, Pandey added.
Pandey said market regulator, Securities and exchange board of India, SEBI has granted exemption for dilution of shares.
Pandey said Government had strong commitment to list LIC and the delay in launching LIC share sale was to de-risk monetisation strategy. “Government was concerned about market volatility and market demand hence delayed IPO,” said Pandey.
Noting that initial estimates on LIC valuations were only speculations, Pandey said analysts and bankers have come up with a complex valuation process. “Valuation process is more of a discovery process for LIC,” Pandey said. Government’s aim was to make the IPO attractive, Pandey said, adding investors would want to see business performance of LIC going forward.
LIC, on course to its Rs 21,000-crore Initial Public Offer (IPO), aims at raising up to Rs 5,630 crore on the upper price band from anchor investors.
The IPO will be a pure offer for sale of up to 221.37 million shares. The firm reserved around 59.29 million shares for the anchor investor portion.
Employee reservation portion is at 1.58 million while policyholder reservation at 22.14 million. QIB portion set at 98.83 million.The anchor investment will open on May 2 and the IPO will open for subscription on May 4. It will close on 9 May. The basis of allotment will be on May 12 and shares will be credited on the demat accounts on May 16. The company plans to list on exchanges on May 17.
India's largest IPO, which slashed around 60 percent of its issue size due to poor market conditions, earlier announced its price band at Rs 902-949 a share.
With this, LIC will become the country's fifth most-valued listed firm, with a market cap of over Rs 6 trillion, according to calculations by Moneycontrol. Globally, it will rank 186th in terms of market cap.
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