India
On March 11 LIC is expected to undertake an initial public offering (IPO)
Three sources with direct knowledge of the subject told Reuters that India’s state-run Life Insurance Corp (LIC) will begin a public offering of shares on March 11 for anchor investors, which is expected to be the country’s largest yet at $8 billion.
Other investors would be able to bid on the book after a few days, according to the sources.
BAND OF LIC IPO PRICES
The LIC IPO is anticipated to receive regulatory approval by the first week of March, after which an indicative marketing price band would be created, according to the sources, who declined to be identified since the deal discussions are confidential.
LIC did not respond to a request for comment. A Reuters request for comment was not immediately returned by a representative for the finance ministry.
INDIA’S MAJOR INITIAL PUBLIC OFFERING
The IPO of the insurer will be a test of the depth of India’s financial markets, where equity deals for more than a few billion dollars are uncommon. Last year, payments company Paytm had the largest IPO to date, valued at $2.5 billion.
Investor demand for new stock offerings has been dampened by LIC’s offering, with several Indian businesses that floated last year trading below offer prices due to concerns about high valuations and impending interest rate hikes by central banks.
According to the sources, the IPO debut date may vary, but the issuer is currently trying to meet those deadlines.
DETAILS OF THE LIC INITIAL PUBLIC OFFERING
On Sunday, LIC, India’s largest insurance business, submitted a draught IPO prospectus with the stock exchange regulator, proposing to sell 5% of the Indian government’s holding to raise roughly $8 billion.
LIC could begin offering public shares by mid-March, according to sources who spoke to Reuters last month. They didn’t go into detail.
The government is rushing to complete the IPO by the end of March to achieve its 6.4 per cent of GDP budget deficit target for 2021/22, which is predicated on generating roughly 600 billion Indian rupees ($8.03 billion) from the offering.
New Delhi cut its divestment and privatisation ambitions for the fiscal year ending March 31 from 1.75 trillion rupees to 780 billion rupees.
It has only raised 120 billion rupees so far by selling stakes in state-run enterprises such as Bharat Petroleum Corp Ltd and two banks.
Investor roadshows for the sale, which is expected to be the world’s third-largest insurance IPO at $8 billion, began earlier this week, according to two sources.
The deal’s book-running lead managers include SBI Caps, Citigroup, Nomura, JPMorgan, Goldman Sachs, and five additional domestic and foreign investment banks.
According to fund managers and experts, LIC’s imminent initial public offering has hammered shares in other listed Indian insurers as investors decrease their holdings to make place for the state-owned giant.
With over 280 million policies, the 66-year-old firm leads India’s insurance sector. In 2020, the most recent year for which statistics are available, it was the fifth-largest worldwide insurer in terms of insurance premium collection.
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