The Indian government has urged regulators to swiftly review Life Insurance Corporation’s draft prospectus ahead of the country’s largest IPO.
Sources told Reuters that the Securities and Exchange Board of India (SEBI) has been asked to complete the vetting process in less than three weeks instead of the 75-days it usually takes. An official said they have 10 bankers, who are available 24/7 for any questions the SEBI might have, for the deal. The government wants a “clean” draft prospectus to be submitted.
The Modi-led government is keen to avoid any loss of face and gain momentum for its privatization programme, which is intended at replenishing the government coffers. The official highlighted that the finance ministry’s divestment department was solely focused on the IPO for the state-backed insurer. It hopes to gain as much as $12 billion and as such, had put aside other privatization plans for the fiscal year. The draft prospectus is likely to be submitted to the SEBI in the next few days.
Manoj Dalmia, Founder and Director of Proficient Equities Limited, had said that the LIC IPO is the only Indian PSU in the insurance sector to hold such a big market share. “LIC’s first-half net profit zoomed to Rs 1437 crore compared to Rs 6 crore the previous year, mostly due to income from investment,” he said. “Net premium increased by only 1% to Rs 1,86 lakh crore which is positive for the IPO. Oversubscription is expected so we recommend applying through two to three different Demat accounts so that the chance is high.”
Market analysts believe the LIC IPO will provide long-term investors with an attractive investment opportunity. Ravi Singh, vice president and head of research at Share India Securities, said the LIC IPO offers a great opportunity to retail investors and employees to invest in the company for the long-term as well as making quick listing day gains. “The LIC policyholders may have a 10% reservation in the LIC IPO which is an added advantage.”
LIC has nearly $500 billion in assets and controls more than 65% of India’s market share for life insurance policies. Reports say around 1.2 million field agents have been dispatched across India to woo its millions of policyholders into becoming retail investors for the first time.