Government tweaking rules to ensure success of its biggest IPO

NEW DELHI: From adjusting capital-markets guidelines to sending telephone messages and publishing newspaper commercials, authorities and executives are leaving no stone unturned in making an attempt to make sure Life Insurance coverage Company of India’s (LIC) document preliminary public providing (IPO) is successful.
The federal government has the IPO — which might increase between Rs 40,000 crore ($5.4 billion) and Rs 1 lakh crore this quarter — as a key merchandise in its financial agenda, with proceeds from the state-run insurer important to reaching a budget-deficit goal.
“The dimensions of LIC is breathtaking,” mentioned Abhay Agarwal, fund supervisor at Mumbai-based Piper Serica Advisors Pvt. Whereas it may be simple for the federal government to make regulatory amendments wanted for the IPO, “it would require important advertising efforts to cross the Rs 50,000 crore line,” he added.

Authorities will evaluation and amend guidelines on foreign-direct funding (FDI) to make it simpler to lure buyers from overseas, an official mentioned this month with out specifying a time frame.
Fairness stakes amongst foreigners are allowed for many insurers, however not in LIC, which is a particular entity created by an act of Parliament.
The clearance for overseas stakes within the mega providing wouldn’t simply allow international funds to take part, but in addition permit them to purchase extra after the trade itemizing.
Regulators made different strikes late final month, together with tightening guidelines governing share gross sales by anchor buyers.
‘Be ready’
Because it units the stage for the providing, LIC has been sending SMSs to policyholders, and final month began publishing newspaper adverts with the title, “It’s greatest in life to be ready.”
The agency requested prospects to replace a few of their private particulars and the accounts that permit them to take part within the situation.
The Securities and Alternate Board of India (Sebi) is planning to recruit 120 senior executives throughout its authorized, info know-how, analysis, and normal and official language departments, representing about 14% of its workers.
Greater than 110 corporations offered shares for the primary time in India final 12 months to boost practically $18 billion, a fourfold enhance from 2020.
Whereas the typical efficiency since debut has been optimistic, the nation’s biggest-ever IPO final 12 months was a flop. Digital-payments big Paytm has tumbled greater than 45% since its $2.4 billion itemizing in November, with analysts pointing to its costly valuation.
Paytm’s IPO toppled the long-standing document held by Coal India Ltd, whose providing in 2010 noticed the federal government promoting a ten% stake within the agency. Whereas the inventory jumped in its buying and selling debut, it’s now down by about one-third from the itemizing worth.
“The federal government may even have to study from its previous mistake of pricing public sector IPOs too excessive,” mentioned Piper Serica’s Agarwal. “The valuation must depart sufficient on the desk for buyers to draw them to the IPO.”