The IPO of Life Insurance Corporation, which was set to be the largest IPO in Indian corporate history, has had its valuation slashed down by half. The Central Government has settled for a valuation of Rs 6 lakh crore around half the initial valuation as estimated in the budget of FY22.
Moreover, the company is also going to approach SEBI for reducing the IPO size to less than 5%. With these lower valuations, the company will be able to raise Rs 30,000 crore from the planned sale of 5%. The price band is estimated to be Rs 1000-1100.
This move comes after institutional investors cited how similar institutions were valued abroad. Another reason for decreasing the valuation is the continuous outflow of cash from both India and other emerging economies due to the Russia-Ukraine war.
However, to offer less than 5%, the government needs special permission from the market regulator since companies valued over Rs 1 trillion need to dilute at least 5% in their IPO. With existing approvals, LIC must bring their IPO before May 12th.
Irrespective of the reduced valuation, LIC is still the largest IPO in Indian history.
Highlight by Aman Agarwal.