LIC IPO: Govt seeks fast-track review as filing likely in next few days

Securities and Exchange Board of India (SEBI) to complete its review process in less than three weeks instead of the 75 days usually required.

One of the government officials said, “We have 10 bankers for the deal. They are available 24/7 for any queries from SEBI.” A “clean” draft prospectus will be submitted.

The official also said that the government’s disinvestment department was solely focused on the IPO of the giant state-backed insurer, which is expected to generate profits of up to $12 billion, and had set aside other privatization plans for this financial year.

Sources said the draft prospectus is likely to be submitted to Sebi in the next few days.

The finance ministry, SEBI and LIC did not respond to Reuters requests for comment.

After pledging several times to list LIC by the end of the financial year, Prime Minister Narendra Modi’s administration is gearing up to gain further momentum for its privatization program aimed at avoiding any loss of face and replenishing the exchequer. looking forward to.

LIC, which has assets of around $500 billion and captures more than 65% of India’s market for life insurance policies, is leaving no stone unturned to make its IPO a success.

In addition to heavy advertising in local newspapers, nearly 1.2 million field agents have been dispatched across India so that many of its more than 250 million policyholders become first-time retail investors. Policyholders have also received a text message recommending that they open an electronic stock holding account early so that they can participate in the IPO.

However, how successful the sale of LIC’s shares will be remains an open question.

The government is keen to raise $12 billion through IPO. Selling 5% of LIC’s stock to achieve that amount would be a sign of success, but the government is willing to consider selling up to 10%, government and banking sources have said.

A Mumbai-based investment banker working on an IPO said, “We have never seen an issue size of this ratio in the Indian market and even though we know a company like LIC will attract attention, it may not be that easy. “

“There is still a lot to be done to make this IPO a success,” he said.

With LIC a household name in India, bankers working on the IPO say they are confident of strong demand from retail investors, but strong institutional demand will be key.

Much of LIC’s financial position, including future cash flows for life insurers and key financial gauges for insurers, is yet to be disclosed.

Many investors are also likely to be concerned that LIC’s investment decisions, including those of loss-making state companies, may be influenced by government demands.