The listing of LIC is set to be India’s biggest ever IPO, with the government aiming to raise up to Rs. 900 billion ($12.24 billion) from its stake sale.
The move will help ease the fund-raising process for the IPO planned by the government for the company most likely in the current financial year. The IPO is expected to be offered in two parts to investors given concerns over the Indian stock market’s ability to absorb an offering of such a size.
Last month, the government had shortlisted 10 merchant bankers including heavyweights like Goldman Sachs, ICICI Securities and JP Morgan Chase to manage the behemoth IPO. Further, the government has also invited bids for legal advisors as well as from public relations entities.
Government had stated its intent to sell a minority stake in the country’s largest life insurer in the 2020-21 Union Budget. The government is counting on raising close to Rs. 1 lakh crore from the public offering, which will make up a substantial portion of its divestment target of Rs. 1.75 lakh crore for the current fiscal year.
LIC’s assets swelled past the Rs. 38 lakh crore mark in the previous financial year helped by a swashbuckling rally in the domestic equity market. In 2020-21, the life insurer collected Rs. 1.8 lakh crore in new business premium, implying a growth of 3.5 per cent.