Life Insurance Corporation of India (LIC) has received the approval of the Securities and Exchange Board of India (Sebi) for its initial public offering (IPO), though it is not clear when the insurer will go ahead with it.
The approval for the insurance behemoth came 22 days after it had filed the draft papers, among the fastest clearances given by the market regulator. Typically, it takes around one-three months for the regulator to clear a company’s preliminary documents.
According to the draft red herring prospectus (DRHP) filed on February 12, the company aims to offload a 5% stake or 31.62 crore shares through the offer, which could fetch the insurer nearly Rs 65,000-75,000 crore. Further, the issue is likely to have reservations for eligible employees and LIC policyholders of the company, as per the DRHP.
The government had initially planned to list the insurance giant before the end of the current fiscal to meet the revised disinvestment target of Rs 78,000 crore. However, uncertainty in the markets due to the ongoing geopolitical crisis has caused some uncertainty over the mega IPO. It is possible the government will postpone the IPO to the next fiscal, market sources said.
The equity benchmarks have corrected nearly 6% so far this year, while crude oil prices have crossed $130 a barrel due to the ongoing war between Russia and Ukraine. Additionally, the IPO comes at a time when foreign investors have turned bearish on Indian equities, selling shares worth $13.1 billion since January 2022.
On successful listing, the IPO would become the biggest in the history of capital markets in India. So far, Paytm holds the position of the largest IPO after raising Rs 18,300 crore in 2021, followed by Coal India (Rs 15,500 crore). The government has appointed 10 merchant bankers for the LIC IPO, led by Kotak Mahindra Capital Company and Axis Capital.
