LIC IPO size could be decreased; valuations suffer due to Russia Ukraine war

The government may be looking to cut down the size of Life Insurance Corporation or LIC IPO size by 40%.

As per reports, the government could cut down LIC IPO size to Rs 30,000 crore from Rs 50,000 - 55,000 crore previously estimated.

A Bloomberg report cites the Russia Ukraine war as the primary reason for cutting down the size as the geopolitical situation has put a dent in the valuations.

The report also stated that India's biggest IPO could be listed in the next two weeks.

As recently as April, Prime Minister Narendra Modi’s administration was looking to raise Rs 50,000 crore by selling as much as 7 percent of LIC. The stake sale now could be a little over 5 percent on muted demand from investors.

The government, last week, amended the rules of the Foreign Exchange Management Act (FEMA), paving the way for up to 20 percent foreign direct investment in the insurance behemoth LIC.

LIC in February had filed the Draft Red Herring Prospectus (DRHP) before the markets regulator SEBI for the IPO. Last month, Sebi gave approval to the draft papers.

LIC IPO would be bigger than One 97 Communications which raised about Rs 18,300 crore in November and is known to be the biggest Indian IPO till date.

Firms in India have raised about $1.1 billion through IPOs this year, data compiled by Bloomberg show. That’s less than half of the nearly $3 billion raised in the same period in 2021.