IPO: Govt Goes the Distance to Make IPO a Success

The LIC IPO is scheduled to hit the market in early May. To ensure that the IPO goes off without a hitch and is a success, the government and its executives are giving everything a hundred percent. Authorities have made changes in relevant rules to attract foreign investors and published advertisements, and sent out SMSes to policyholders encouraging them to take part.

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 Life insurance companies can't stop talking about the importance of having a Demat account and how it's such an important part of having a bank balance. One of them even issued a statement to all its policyholders encouraging them to open a Demat account right after the IPO.

 Recently, a change in the Foreign Exchange Management Act (FEMA) has opened up new opportunities for long-term capital gains (LTCG) and portfolio investors alike to invest in stocks by allowing up to 20 percent foreign direct investment in Life Insurance Corporation's stock through qualified foreign investors. These capital gains will hopefully encourage investment into more of India's listed financial companies.

LIC IPO: The Fiscal Math

 The government expects to raise Rs 21,000 crore from the LIC IPO proceeds. This is according to government officials who spoke with agencies today. Since the IPO amount is now much smaller, as compared with early estimates of over Rs50,000 crore, this will make it difficult for the government to meet its deficit targets.

 Last year (2021/22), the Indian government set a disinvestment target of Rs1.75 lakh crore. The target was only able to achieve Rs78,000 crore by the end of the financial year, leaving a shortfall of 55.4%. In addition, four new policies were launched, which would be made available by LICIPOK this coming financial quarter, one of them being the decision to report your combined health insurance payments online.

 The IPO is likely to open on May 4 and close on May 9, according to sources. The anchor book could open a day before, on May 3. The Securities and Exchange Board of India (Sebi) has already given its approval to the updated draft red herring prospectus for the IPO. Through this, the government will offload its 5-cent stake instead of the 3.5 percent planned initially.

 Retail investors will be eligible to participate in 35% of the IPO issue size, while 15% will be reserved for non-institutional investors. Around 50% of the IPO issue has been fixed for qualified institutional buyers (QIBs). Of this percentage, 60% has been earmarked for anchor investors on a discretionary basis.

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