JOIN USLIC aims to raise Rs 25,000 crore from anchor investors before opening IPO
As a part of Life Insurance Corporation of India’s (LIC) mega initial public offering (IPO), the government is bringing in a group of anchor investors to fund up to Rs 25,000 crore in its shares.
The board structure of the insurance company will be changing and it will also create new accounting norms before the IPO, said two people, including a top central government official, on condition on anonimity.
“We will invite anchor investors after the embedded valuation exercise is done and the pricing for the IPO is ready,” the government official told Mint. According to the other source, more than two dozen anchor investors will be there for LIC’s IPO.
The anchor investors will be buying shares meant for qualified institutional buyers (QIBs) to “help measure market demand” before the IPO opens. If the market demand is more than the investment, then the investors will be required to add more funds to match the market price and if it’s less, then “we don’t have to refund the extra amount to anchor investors”, the official said.
LIC doesn’t have a prescribed board as per the listing norms of the Securities and Exchange Board of India (SEBI), hence structural changes in the board will take place. The new structure will make it eligible for listing.
The government official told the publication, “There will be changes at the constitutional level at LIC. Though we term LIC’s board as a board, there is no prescribed board at LIC as defined under SEBI’s listing norms.”
“Apart from the ongoing actuarial valuation exercise underway at LIC, several other changes will be done at LIC. We are regularly meeting LIC to speed up the IPO process,” he added.
“Once their annual financials are ready, it will aid the process of valuation. We will come out very soon with the RFP for appointing merchant bankers, advisors, and the registrar for the IPO,” the official said, adding that, the draft red herring prospectus will be filed within six months.