Life Insurance Corporation (LIC) May Split its IPO Into Two, Says Reports
In a first, the state-owned Life Insurance Corporation (LIC) probably might split its initial public offering (IPO) into two portions with a few months between them. Not only would this be the country’s largest public offering, but also the first-ever IPO to be divided into two sections.
LIC plans to raise Rs 1 lakh crore
According to The Times of India report, LIC plans to raise Rs 1 lakh crore through the IPO. There have been talks regarding the fact that the market may not be capable of absorbing the entire issue of such a huge offering in one go.
Typically, government-owned enterprises do not engage in any kind of share placement with investors before the offer, such as selling to cornerstone investors, pre-IPO placement to significant institutions, or selling a portion of the IPO to anchor investors a day before the issue begins.
According to the report, officials associated with the IPO process anticipate that with so many offers already closed and more in the process before the LIC offer enters the market, a considerable portion of investors’ funds will have already been absorbed.
Another alternative being considered, according to the sources, is for cornerstone investors and marquee asset managers to invest huge sums of money ahead of the IPO.
The phrase “cornerstone investors” refers to investors who commit in advance to invest a specific amount of money or a specific number of shares in an initial public offering (IPO).
IPOs garnered more than Rs 50,000 crore between January and July. Experts told Moneycontrol that approximately 18 companies could obtain about Rs 28,000 crore through initial public offerings in August.
As of 2019, the Life Insurance Corporation of India had a total life fund of ₹28.3 trillion.
The total value of traded policies in the year 2018–19 is ₹21.4 million. The Indian government-owned insurance settled 26 million claims in 2018–19.