LIC IPO draft papers likely to receive Sebi's approval on Monday

Listing may spill over into FY23 as geopolitical tensions roil markets

Even as the Centre is staring at the prospect of the public listing of Life Insurance Corporation of India (LIC) spilling over into the next financial year, the government will go ahead and file the offer documents soon after it receives the market regulator’s approval for the draft red herring prospectus (DRHP), said a senior government official.

The government is expecting the Securities and Exchange Board of India’s nod for the insurer’s DRHP on Monday, the official said.

The regulator’s queries would be responded to at the earliest, and the government, after reviewing market volatility, would indicate the initial public offering’s (IPO’s) launch date in the red herring prospectus (RHP), the official said.

The RHP would include the issue size and the price band of shares, among other details. LIC filed the DRHP with Sebi on February 13. The government is looking to sell a 5 per cent stake, or 316 million shares, in the insurer through the IPO.

The continuing war between Russia and Ukraine has spooked investors, with the government-appointed merchant bankers advising it to push the IPO by one or two months. “These are black swan events, and nobody had anticipated that the war would continue for so long. We are closely watching the situation as it unfolds,” the official quoted above said. 

Earlier Friday, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said the government’s desire was to come up with LIC’s IPO before March 31, but with the ongoing geopolitical tensions, the situation was very dynamic.

“There are certain unanticipated events which have taken over. Right now, we are closely watching the market. Certainly, whatever the government will do, it will do in the best interest of investors and also the IPO,” Pandey said at an event. The government would be watchful and devise its strategy accordingly, he added.

Merchant bankers have advised the government that the current circumstances are not conducive for any company’s IPO, and pulling off the launch of the country’s largest public offering will be difficult.

The feedback from investors is not yet complete as they have been occupied with managing their current portfolios. Investors are looking to exit investments due to losses, and have not been able to participate fully in roadshows, merchant bankers have informed the government.