“LIC IPO expected shortly,” announces FM Sitharaman while presenting Budget 2022

The government is contemplating a two-part IPO of LIC due to disquiet over the equity market’s proficiency to absorb such a large primary issue at one go.

Finance Minister Nirmala Sitharaman in her fourth Budget speech conveyed that the Life Insurance Corporation’s initial public offering is expected shortly.

The IPO of life insurance is envisioned to be one of the biggest in the country, with the government aiming to raise close to $12 billion by selling a minority stake to the public. The government is relying on the sale of shares in LIC, which has the lion’s share of the life insurance market in India, to fill the fiscal deficit this year.

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Last week, DIPAM Secretary Tuhin Kanta Pandey told that the government was targeting an early March date for the LIC IPO. Pandey had declared that the LIC IPO was very important and the government’s next big task. “We are very sanguine on bringing the LIC IPO this quarter, in early March. We had had extensive consultations with IRDAI (The Insurance Regulatory and Development Authority of India) and SEBI (Securities and Exchange Board of India) on the LIC IPO,” Pandey had said.

The government is contemplating a two-part IPO of LIC due to disquiet over the equity market’s proficiency to absorb such a large primary issue at one go.

The Budget for 2021-22 has fixed a disinvestment target of ₹1.75 lakh crore, as against ₹32,835 crores garnered in the last fiscal. Of the ₹1.75 lakh crore, ₹1 lakh crore is to come from selling government stake in public sector banks and financial institutions, and ₹75,000 crores will be CPSE disinvestment receipts.

Until now, ₹9,330 crores has been tidied up through a minority stake deal in PSUs. LIC, book managers, and government officials have reportedly been functioning to whet the draft red herring prospectus of the life insurer, which was earlier anticipated to be filed last month.