Govt expects to launch LIC IPO in 2-3 weeks, feels mkt conditions improving

Feels market conditions improving, but still keeping a watch; updated DRHP filed with Sebi

The government is expecting the launch of the initial public offering (IPO) of Life Insurance Corporation of India (LIC) in two to three weeks as certain developments such the US Federal Reserve's interest rate hike seeing a minimal impact on the markets have made the situation better for India's largest listing, sources in the know said.

LIC and the Centre also filed an updated draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi), responding to the regulator’s queries on disclosure of risks and whether the valuation of the insurer at the time of filing the DRHP and listing would remain the same.

The government hopes to receive the regulator's nod to the updated DRHP and launch the IPO in 2-3 weeks, if market volatility subsides, an official said. Geopolitical tensions on the back of the Russian invasion of Ukraine have spooked investors.

The government has been keeping an eye on the market, and was closely watching the impact of the US Fed’s interest rate hike on the markets, the official quoted above said. 

The government is awaiting approvals from Sebi, and will soon start talking to anchor investors, he added.

One key gauge that the government has been monitoring is the India VIX, a gauge of volatility. The India VIX closed at 24.62 on Monday, against a normal range of 14-15.

The updated DRHP has also been filed addressing the Sebi’s observation and responding to the market regulator’s queries. This is a part of the consultation process with the capital market regulator and LIC, an official said.

Observations by Sebi included whether the valuation of the insurer filed at the time of filing the DRHP would be the same as that at the time of listing. The regulator has also advised that legal advisors may check the risks disclosed in the DRHP so that investors are adequately informed, the official said.

Queries also included corroboration of the facts such as LIC having the largest market share in the country, and its business, the official said. The auditors and legal advisors have done this due diligence, he added.

LIC has also updated its financials for the December quarter (Q3) of financial year 2021-22 (FY22), fulfilling a requirement of US Securities and Exchange Commission (SEC). The insurer had reported a net profit of Rs 234.91 crore in the December quarter.

After filing the updated DRHP, the consultations with the regulator would continue. “More observations are expected from Sebi that will have to be complied with,” the official said.

The launch of LIC’s IPO is being closely watched by market participants and investors, who have burnt their fingers investing in the IPOs of new-age companies. The IPO of LIC is expected to create a market for a long list of companies that are looking to launch their IPOs.

On Monday, Union Finance Minister Nirmala Sitharaman said in Parliament that the government may offer a discount on the issue price to LIC’s eligible policyholders. The government has reserved 10 per cent of the issue for over 10 million eligible policyholders.