INSUBCONTINENT EXCLUSIVE:
LIC on Tuesday received the go-ahead to raise funds via its IPO.It looks like investors' focus has shifted away from the initial public
offering (IPO) market.As per a leading financial daily, companies with plans of at least Rs 770 bn to raise in IPOs are waiting on the
51 companies to be precise.Even as they have received regulator's go ahead, companies are waiting for market conditions to improve.And this
doesn't even include the 43 companies that have filed their IPO documents but haven't received clearance.Yesterday, in a big development,
the market regulator gave the green light to the much awaited LIC IPO
The regulator issued the observation letter and gave the approval, 22 days after the government submitted the prospectus.With the regulator
clearing approval for India's largest IPO, will the situation of Indian primary markets get better? Are we about to see a flurry of IPOs
every month going forward?If we are to go by experts, the weak IPO scenario is likely to persist until the end of the fiscal first quarter
The volatility triggered by the Russia-Ukraine war has dampened investor sentiment.There was tremendous excitement in early days for the LIC
IPO when the center informed about the financial position of LIC and the changes in the company structure.Let's look at the recent
developments with regards to the LIC IPO.India's biggest IPO gets the green light
The government will sell over 310 million equity shares of LIC, according to the draft red herring prospectus (DRHP).A portion of the IPO
would be reserved for anchor investors
Also, up to 10% of the LIC IPO issue size would be reserved for policyholders.The IPO is offer for sale (OFS) by the government of India and
there is no fresh issue of shares by LIC
The government holds a 100% stake or over 6,324.9 million shares in LIC.The center is expected to garner Rs 63,000 crore by selling a 5%
biggest IPO in the history of the Indian stock market
Once listed, LIC's market valuation would be comparable to top companies like Reliance Industries and TCS.So far, the amount mobilised from
can read the same here: LIC IPO is Here: 6 Things to Know Before Applying.Expected IPO Launch DateThe ball is in government's court
now.While the regulator has approved the issue late evening yesterday, the government will have to decide when it wants to launch the
issue.Markets across globe are witnessing a correction of some sort due to the ongoing war between Russia and Ukraine
Thus, the most likely scenario appears that the government may defer the IPO because of weak market conditions.There have been several
reports stating the government may defer the mega LIC IPO to the next financial year, due to high market volatility due to the ongoing
Russia-Ukraine war.Earlier this month, Finance Minister Nirmala Sitharaman said that while she would like to go ahead with the LIC IPO as
planned, she wouldn't mind looking at deferring it given the global considerations.There are other concerns as well including continuous FII
outflows and March not being a right month for a large public issue.What happens if the LIC IPO is delayed?The government needs this IPO to
The IPO is crucial for the markets as it will help the government narrow its fiscal deficit.About 35% of the entire IPO is reserved for
retail investors, so that's a huge task for the government
LIC's IPO has been called India's Aramco moment
It will require huge commitment from retail investors.If the IPO is delayed, it would send the government's divestment revenue in this
financial year to over a decade low.But reports state that even as the divestment revenues touch a 10 year low, the government may be able
to hold up its finances at least for this financial year, owing to higher tax revenues.Like it or not, the IPO will be the defining market
Retail investors who were excited for upcoming IPOs are changing their stance.This year so far, only three companies have managed to launch
In comparison, close to 10 companies came out with their IPOs during the same period last year.In 2021, IPOs mobilised a record Rs 1.1 lakh
Many were estimating this year could top that record, all thanks to the mega LIC IPO
20% since the start of 2022
One out of every three IPOs this financial year is presently trading below its offer price.Adding to worries is the correction in the
According to reports, stocks of companies that actively trade in the unlisted market have come off between 20-40% in recent weeks.If you
still wish to invest in IPOs, be very clear about your strategy and expectations
It's important to remember, like the stock market, IPOs too come with risks.Due diligence is essential before investing in them
It is not a stock recommendation and should not be treated as such
This article is syndicated from Equitymaster.com(This story has not been edited by TheIndianSubcontinent staff and is auto-generated from a
