Govt plans to raise nearly Rs 30,000 crore through mega LIC IPO

New Delhi is halving its fundraising goal for Life Insurance Corporation of India’s IPO to 300 billion rupees ($3.9 billion), having had to cut its valuation estimates after feedback from investors, a government source said.

The drastic lowering of ambitions for the IPO – which would still be India’s largest to date – is a setback for Prime Minister Narendra Modi’s administration which had positioned the sale as the first and biggest of a wave of privatisations aimed at replenishing state coffers.

The state-owned insurance behemoth, also India’s largest domestic financial investor, is now valued at around 6 trillion rupees, according to the source, who declined to be identified as the IPO discussions were confidential.

Earlier government estimates had called for the insurer to be valued at around 17 trillion rupees. “Investors have become very risk averse in the last few months. After roadshows we realised there was no point in putting high valuation up front. Higher valuation can be discovered post the listing. After all, the government will still hold nearly 95% of the issue,” said the source.

The government plans to sell a stake of just over 5%, he said. The source added that fresh regulatory approval for the listing process will need to be sought but did not elaborate. The government had previously said it would sell a 5% stake.

The IPO is likely to be launched in the first week of May, investment banking sources said. The finance ministry did not immediately respond to an email requesting comment.

The government had initially wanted to list LIC in the last financial year that ended March 31 but had to delay the sale after Russia’s invasion of Ukraine triggered a market rout.

The 66-year-old company dominates India’s insurance sector with more than 280 million policies. It was the fifth-biggest global insurer in terms of insurance premium collection in 2020, the latest year for which statistics are available.

Investors have been concerned that LIC’s investment decisions, including those in loss-making state companies, could be influenced by government demands.

(Reporting by Aftab Ahmed; Additional reporting by Nupur Anand and Scott Murdoch; Editing by Edwina Gibbs)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor