LIC IPO: Here’s Why You Shouldn’t Ignore It

LIC IPO

The much-awaited LIC IPO will not take place for at least another year, as signs given by the company indicated this week.  A document written by LIC executives for potential investors is the surest sign yet of things to come. 

The document says the company plans to accumulate shareholders this year to a number above 500.  Once a company goes above that number, they must by law either disclose financial information or go public. 10% of the issue size will be reserved for policy holders.

LIC IPO Size And Date

The Insurance company initiated an IPO size of around Rs 70,000-80,000 crores.  In less than two years, the value of LIC has gone from doubled.  There are fewer than thousand investors, including venture capital firms, private investors, and current and former employees.

Current Finance Minister of India has announced in Union Budget 2021 that the LIC IPO should complete in 2021. This contradicts CEO Shri Siddhartha Mohanty’s statement that he is in no rush to go public.

The SEC rules that once a company has more than 500 investors, they must disclose certain financial information.  At that point, a company may as well go public.  They have until 120 days after the end of their fiscal year to go public, which for Life Insurance Corporation.  That is why we are currently looking at that date for the LIC IPO.

Price Band of LIC IPO

Analysts don’t know why Life Insurance Corporation decided to disclose that the company intends to go over the 500+ investor limit this year, thereby indirectly all but announcing the LIC IPOPrice Band of LIC IPO: ₹, to ₹, Per Share.

There is some concern over the secondary stock selling market going on with sales of former and current employees’ shares.  This makes the valuation of the company difficult because of the small amounts of shares changing hands, not representative of the entire picture.

Disclaimer:

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