NEW DELHI (Reuters) – India expects to raise up to $2.7 billion through an IPO of Life Insurance Corp of India that opened to retail and other investors on Wednesday, more than two years after the government raised the prospect of taking the giant company to market.
New Delhi had hoped to raise up to $12 billion for the 3.5% stake in the country’s largest insurer, but after missing a series of deadlines, it will achieve only a fraction of the amount.
The 66-year-old insurance behemoth is expected to list on Indian stock exchanges on May 17 amid volatile market conditions, having missed last year’s IPO frenzy.
This is a timeline of the government’s listing plans for LIC, which commands more than 60% of the Indian insurance market.
February 2020
The Indian government announces plans to sell part of its stake in LIC through a possible IPO to help meet a broader $29.6 billion state asset divestment target for the financial year ending March 2021.
April 2020
The LIC listing plans are derailed as the COVID-19 pandemic affects fundraising plans for several companies due to market uncertainty.
December 2020
The sale is further delayed as the government begins to determine the embedded value of the insurance giant for the first time, an exercise that ultimately takes more than a year.
Embedded value is a measure of future cash flows in life insurance companies and the key financial metric for insurers.
February 2021
The government says it plans to sell around 10% of its shares in LIC by the end of March 2022.
January 2022
The government sets itself a mid-March deadline to raise up to $12 billion through an IPO and asks regulators for a swift review of a draft prospectus..
Feb. 1, 2022
The government announces drastic cuts to plans to sell stakes in state-run companies. The proposal to lower the overall divestment target reduces expectations of the LIC IPO to a 5% stake sale, from 10% earlier.
Feb. 3, 2022
LIC’s embedded value is finalised at more than 5 trillion rupees ($66.82 billion), Reuters reports. LIC’s market valuation is seen as two to three times its embedded value.
Feb. 13, 2022
LIC files its draft IPO papers with an embedded value of 5.39 trillion rupees.
The company management then starts to hold virtual roadshows for potential investors.
Feb. 24, 2022
Russia invades Ukraine in what it calls a “special military operation”, battering global markets and leading many foreign investors in emerging markets to sell holdings.
Feb. 26, 2022
India’s cabinet approves a policy amendment allowing foreign direct investment of up to 20% in LIC. Government officials remain confident of an IPO by the end of March 2022.
March 1, 2022
Bankers advising LIC have pushed the government to defer the launch of the IPO, because of the market jolt from the invasion, Reuters reports.
Sources later confirm that the plan to list LIC is being pushed to the next financial year, starting April.
April 22, 2022
New Delhi could halve its fundraising goal for LIC’s IPO to around $3.9 billion after cutting valuation estimates following feedback from investors, a government source says.
April 26, 2022
India files the IPO prospectus, further lowering the amount it expects to raise to around $2.7 billion from sale of a 3.5% stake, just a third of its original estimates, after investors question LIC’s growth potential.
May 2, 2022
LIC’s IPO opens for an anchor investor subscription that ultimately achieves strong demand and pricing at the top of the range.
May 4, 2022
The IPO opens to subscriptions from retail and other investors.
(Reporting by Aftab Ahmed in New Delhi and Nupur Anand in Mumbai; Editing by Jamie Freed)
