Sebi Likely To Exempt LIC From Mandatory 5 Per Cent Float In IPO | Know More

LIC IPO Update: According to the current position, the 5 per cent IPO norm would mean Rs 35,000-crore LIC issue, which is highly unlikely to excite the market that is reeling under high volatility

New Delhi: The Securities and Exchange Board of India (Sebi) is considering an exemption sought by the central government from compulsory 5 per cent listing of the LIC on float, while the Centre will not launch a follow on public offer (FPO) with the capital market regulator for a year after listing, according to sources of CNBC TV18 on Monday.

According to guidelines by the Sebi, firms cannot carry out a FPO for six months after an IPO.

The Sebi guidelines say that if the post-issue capital of a firm calculated at the offer price is above Rs 1 lakh crore, under the current rules it is needed to issue shares worth Rs 5,000 crore and 5 per cent of equity. However, the government needs an exemption from the regulator if the offer is less than that calculated.

According to the current position, the 5 per cent IPO norm would mean Rs 35,000-crore LIC issue, which is highly unlikely to excite the market that is reeling under high volatility due to ongoing Russia-Ukraine war and rising inflation rates.

News agency Bloomberg on April 22 reported that the size of the mega IPO of the state-run insurer could be slashed by 40 per cent from Rs 60,000 crore to Rs 30,000 crore.

The LIC, which had filed its draft IPO papers on February 13, has time till May 12 to go public without filing any fresh papers with the Sebi. But, if it misses that window, the company will have to file fresh papers with the results of December quarter and updating the embedded value.

The government, which in need for more inflows due to rising crude oil prices, would like to go for the IPO by May 12 to bridge the gap of Budget deficit.