The valuation of the IPO has come after feedback from investors and is fair and attractive to draw retail investors. The decision to list currently was further taken after considering factors like market demand, reduced volatility, and domestic flows, management of LIC and government officials said on Wednesday. Edited excerpts:

On valuations, do you think that the issue was overvalued at Rs 10 trillion earlier or is it undervalued at Rs 6 trillion now?

Tuhin Kanta Pandey: It is not correct to say that three months back this was this and now it is this. I think these are all guesstimates which people have speculated and not from any authority or government sources. There have been hundreds of roadshows where questions have been asked and answered. Valuation is a discovery process because you don’t know what are we comparing. Some might also start calculations based on P/E multiples and ebitda, but they are good for some industry and not good for some others. Extensive feedback has come and we had our merchant bankers, who have done their own modeling, and after the process we have come down to the valuation. It is incorrect to say that it was 10 then and 6 now. I would say that it is a fair and attractive valuation, and it is important to make it attractive because the goal is to make millions of Indian participate in this IPO.

Has LIC sought any exemption from RBI and Sebi?

Pandey: Yes, we have and Sebi has granted an exemption. Actually, this rule is being applied for the first time, because there is no such company which is more than Rs 1-trillion market cap, so this rule is coming for the first time. Obviously, given the current market condition, there is a fair amount of domestic demand, there is probably a subdued demand from abroad. So given the constraints we have, it was the best to take a call on the right size of the issue and to reduce it to 3.5%.

Do you think it was the right time to list or waiting a bit would have been better?

Pandey: The decision taken to list now is taken after considering multiple factors, including market demand, anchor book, stabilising market condition and reduced volatility. We postponed the issue from March as we had concerns about things (volatility) being higher. Domestic flows in market are important and we are seeing domestic flows, because when FIIs have withdrawn, the domestic players have held it. There is a domestic demand, especially for LIC, and we have feedbacks and inputs on the same. We also have financial performance of corporates currently. Secondly, if you ask anybody about what is a good time in markets, nobody can actually predict markets because markets are always influenced by world events. Markets are so integrated in all parts of the world that if something happens somewhere, it impacts. Even if we have a constraint environment, we believe that we can still “pull it off” because that is the kind of the optimum demand scenario which exists.

According to Sebi rules, you have to dilute more 10% in the next two years, will you seek any more relaxation on this?

Pandey: Typically, it is very rare that some company at such maturity level launches an IPO. Relatively, companies launch IPOs at an early stage for raising capital and growth. LIC, however, is a well-grown corporation and hence the larger the market cap, the dilution and its crowding and effect need to be seen. The constraint environment of meeting the 25% minimum public shareholding (MPS) in five years will arrive in this (LIC) corporation, and we will have to resolve it by appropriate talks and measures at that point in time.

What is your call on the IDBI Bank, will you exit?

Pandey: Our position in IDBI Bank is clear, both of LIC and the government, we will exit from IDBI Bank, at least we will exit from the management control and that is the position which is there and the process has been set into motion.

There is a criticism that LIC is a policyholder friendly company and not shareholder friendly – how will you balance this? Also, your view on the company’s profitability?

M R Kumar: Now that we are changing with the listing, I am sure that the shareholders will also have this share. Going forward, we will take all required measures in terms of shareholder value creation and there are many other things that we are doing that I cannot state today but maybe after the Q1.