India is likely to witness the country’s biggest IPO at $8 billion by the state-run Life Insurance Corporation (LIC) on March 11, says a Reuters report. Sources said the book will open first for anchor investors on March 11, then to other investors a couple of days later. This IPO is set to be the third-largest insurance IPO globally.
The LIC is expected to obtain regulatory approval by the week of March. An indicative marketing price band will be set. Experts highlight that LIC’s IPO will be a test of the depth of capital markets in India, where equity deals worth more than a couple of billion dollars are rare. It will sound investor appetite for new equity deals, with a number of Indian companies that listed in 2021 trading below offer prices on concerns over lofty valuations and looming interest rate hikes by central banks.
India’s largest insurance company – LIC filed a draft IPO prospectus on Sunday. The market regulator is set to sell 5% of the Indian government’s stake to raise nearly $8 billion. Last month, sources said the LIC could begin issuing public shares by mid-March.
According to the Financial Express, approvals from both the top exchanges are in place even as the mega IPO awaits green light from Sebi. Investment bankers told the Financial Express that a March 10 opening is possible with a five-day window for investors to put in their applications. If this comes, a debut on the stock exchanges is likely in the fourth week – with bankers saying it could be around March 23 or 24.
The government, as per Reuters, is rushing to complete the IPO by end of March to meet its 2021/22 fiscal deficit target of 6.4% of gross domestic product, which is contingent on it raising around $8.03 billion from the issue. The Indian government has so far raised Rs 120 billion from divesting stakes in state-run companies as it failed to privatize some of the firms, including Bharat Petroleum Corp Ltd.
However, LIC’s IPO has battered shares in other listed Indian insurers as investors trim their holdings to make room for the state-owned company. LIC dominates India’s insurance sector with more than 280 million policies.