LIC IPO: LIC’s IPO preparations are going on in full swing and the government can launch the IPO within the next few days. But in view of the fears of Russia-Ukraine war, rising inflation and interest rates hike, the government is doing everything possible to make LIC’s IPO attractive. To entice investors to invest in LIC’s IPO, the government is considering cutting the valuation of LIC.
Valuation cut possible
According to media reports, the government can cut the valuation of LIC by up to 30 percent. Earlier the valuation of LIC was estimated at Rs 16 lakh crore. But now considering reducing it to 11 lakh crores.
Preparing to woo investors
Actually the government does not want to disappoint the first time investors in the stock market through LIC’s IPO. It is the intention of the government that if the trading of LIC’s shares starts on the stock exchange, then they should get a good profit. Let us tell you that LIC has around 27 crore policyholders while the number of demat account holders in the country is only around 8 crore. In that too, around 50 lakh people who have opened demat accounts are the policyholders of LIC. These people opened demat accounts because they would get LIC’s share at a discount on applying and IPO quota reserve has also been kept for them.
IPO size may be smaller
Earlier where the government was preparing to bring more than Rs 60000 crore IPO through LIC IPO, now its size can be reduced to Rs 37,500 crore . It is believed that LIC may file a revised draft paper for the IPO with the stock market regulator SEBI next week.
What will be the benefit of reducing the valuation!
Reducing the size of the IPO and reducing the valuation can benefit investors. This will help in keeping the IPO price band low. If the price band of the IPO will not be as expensive as that of Paytm’s IPO, more investors will come forward to invest in LIC’s IPO in the hope of better returns. Due to which investors will get more benefits after the stock is listed on the stock exchange.