LIC IPO likely to hit market on May 2;size may be cut to Rs 21K cr
Published On: Friday, April 22, 2022 | By: Team KnowMyStock
The size of the LIC's initial public offering (IPO) may be slashed to Rs 21,000 crore, according to some sources. The IPO, however, may come with a greenshoe option of Rs 9,000 crore. The total IPO size, after accounting for the greenshoe option, will work out to Rs 30,000 crore and will lead to a 5 percent dilution of the government stake. The government currently holds a 100 percent stake in LIC. The IPO is now expected to hit the market on May 2, sources said. The insurance giant’s valuation may be reduced to just Rs 6 trillion, which will be 1.1 times its embedded value of Rs 5.4 trillion, they added.
The government filed LIC's draft papers with the Securities and Exchange Board of India (Sebi) in February, and the aim was to raise around Rs 65,000 crore at a market valuation of Rs 12 trillion.
Even at Rs 21,000 crore, the LIC IPO will be the biggest ever, topping the current record of Rs 18,300 crore held by Paytm.
“The sharp scale-back in valuation is to ensure that the IPO sails through smoothly. Also, the government wants to leave a lot of gains on the table for investors so that they are encouraged to participate in the IPO as well as the subsequent tranches,” said an investment banker.
This will be the first time the greenshoe option will be used for a domestic IPO.
A greenshoe option gives the issuer the option to retain excess subscription. It helps the company adjust its issue to the demand and the market condition.
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