Life Insurance Corporation’s IPO is being fast-tracked in consultation with the Securities and Exchange Board of India (Sebi) and the draft red herring prospectus (DRHP) being filed with the regulator in the first week of February would be as flawless as possible, department of investment and public asset management (Dipam) secretary Tuhin Kanta Pandey told FE, reiterating the government’s resolve to complete the country’s largest IPO in March.
The government could mop up around Rs 1 lakh crore if it dilutes 10% stake in the public sector insurer, but the size of the issue is yet not clear, as market sentiments could decide it. The government has collected Rs 27,330 crore or 16% of the FY22 target of Rs 1.75 lakh crore from disinvestment so far in the year.
Besides the LIC issue, the other major disinvestment that was planned for the current year was the sale of public sector oil refiner and marketer BPCL, but this will likely take place only in the next financial year.
LIC’s will be the biggest ever listing on Indian bourses, much larger than the biggest thus far of One97 Communications (Paytm), which raised about Rs 18,300 crore in November 2021.
“We are keeping Sebi informed (of the preparation of draft prospectus), and the regulatory approval could be faster,” Pandey said when asked if the market regulator approval could come in 35-40 days after the DRHP is filed. “It is a question of how much work we have done for the DRHP and their (Sebi’s) queries… since we have been in touch with the regulator during the preparation of DRHP, it is unlikely that there will be very many regulatory queries. That is how one can save time.” The valuation report of LIC will be ready shortly, Pandey said.
The average time taken for approval of IPO by Sebi touched an 18-year low of 77 days in 2021 with IPOs of Seven Islands Shipping and Macrotech Developers taking just 35 days from prospectus filing to debut, said Pranav Haldea, MD of Prime Database.
Private valuation firm RBSA Advisors had estimated LIC’s worth to be between Rs 9.9-11.5 lakh crore, meaning a 10% stake sale could fetch the government around Rs 99,000-1,10,000 crore. Some reports even suggest a possible valuation of Rs 15 lakh crore.
On Thursday, the government handed over Air India, its subsidiary Air India Express and a 50% stake in ground handling firm AISATS for a consideration of Rs 18,000 crore to Tata Group, which was the original owner of the carrier. The airline was nationalised 69 years ago.
Ahead of the AI transaction, the government cleared its debt and liabilities worth Rs 61,000 crore by repaying its overdue loans from banks and the National Small Savings Fund (NSSF), Pandey said. In the second supplementary demand for grants in December, the government had taken Parliament nod for `62,000 crore towards repaying AI’s debt and liabilities
“From the government side, a fair amount of cleaning up (of AI debt) has been done.” The official said AI privatisation would save the exchequer from absorbing `20 crore in daily losses incurred by it.
BPCL sale, which could have fetched more than Rs 50,000 crore, is spilling over to the next financial year due to delay in inviting financial bids.