LIC IPO expected to hit markets in Jan-Mar quarter of current fiscal
The much awaited mega-IPO of Life Insurance Corporation is expected to hit the markets in the January-March quarter of the current fiscal as the Centre goes on the overdrive to meet the selloff target of Rs 1.75 lakh crore in the fiscal.
The government also plans to call for financial bids to privatise 5 to 6 public sector undertakings (PSUs), including BPCL, in December-January, and close the transactions in this fiscal itself.
The initial public offering (IPO) of LIC is on track and is likely to hit the market in the first quarter of 2022 (calender year), department of investment and public asset management (Dipam) secretary Tuhin Kanta Pandey said on Wednesday.
Speaking at CII’s Global Economy Policy Summit, Pandey said: “After 19 years, we would possibly see 5-6 privatisations this year. Not only Air India but BPCL is also in the due diligence stage. BEML, Pawan Hans, NINL, these are the transactions in which financial biddings can take place in December-January.”
Some reports have suggested that the state insurer’s IPO is expected to raise between Rs 40,000 crore and Rs 1 lakh crore.
The government might allow foreign direct investment in the state insurer to enable a diversified and stronger demand across a varied group of investors.
The investment bankers plan to file the draft prospectus with market regulator Sebi by the first week of December after deriving the embedded value of the insurer.
On BPCL, Pandey said that the process was in the due diligence stage. Three bidders have reportedly shown interest in acquiring the oil marketing company.
“While financial bidding of BEML, Shipping Corp, Pawan Hans, Central Electronic and Neelachal Ispat can take place in December-January, their transaction is expected in the current fiscal,” he said
Pandey said besides ministerial level consultations, the cabinet secretary also held a meeting to simplify the process.
The listing of LIC will be crucial for the government in meeting its disinvestment target. So far this financial year, Rs 9,330 crore has been mopped up through minority stake sales in PSUs and the sale of SUUTI (Specified Undertaking of the Unit Trust of India) stake in Axis Bank.
On Air India, Pandey said the government aims to complete the handover of the national carrier by December.
“We are moving towards a situation in privatisation, where it is not only in policy but also in action,” Pandey said.
Finance minister Nirmala Sitharaman addressing the CII event asked India Inc to be a lot more risk-taking, build capacity and understand what the country is looking for.
“We want the Indian Industry to come forward and expand. Whether you are building a road or mass housing, you need to be scaling up and speeding up and it is that work which would gain traction in government policy and in the government’s funding initiative,” she said.
Department of economic affairs secretary Ajay Seth said at the CII meet that India needed to double the capital expenditure in the medium term from about 5-6 per cent of the GDP.
Efforts, he added, have to be made to channelise all avenues of savings for garnering resources to step up investment in infrastructure.
Economic growth has to come from a virtuous cycle of private investment with the private sector having a larger economic role, while the government’s role would be that of a facilitator, Seth said. He further said that the Indian capital market has to mature to enable investors to attract long-term funds.