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India Cuts Down On Fundraising Target Via LIC's IPO By 50% To $3.9 Bln –Reports

India Cuts Down On Fundraising Target Via LIC's IPO By 50% To $3.9 Bln –Reports
The Indian government is lowering its fundraising goal for the Life Insurance Corporation of India's first public offering (IPO) to 300 billion rupees ($3.9 billion), after having to lower its valuation projections in response to investor comments, according to reports quoting a government source.
The administration of Prime Minister Narendra Modi, which had positioned the sale as the first and largest of a wave of privatisations aimed at replenishing state coffers, has been dealt a setback by the sharp reduction in goals for the IPO, which would still be India's largest to date.
According to a person familiar with the IPO discussions, the state-owned insurance behemoth, which is also India's largest domestic financial investor, is currently valued at roughly 6 trillion rupees.
According to previous official estimates, the insurer is worth roughly 17 trillion rupees.
"Investors have become very risk averse in the last few months. After roadshows we realised there was no point in putting high valuation up front. Higher valuation can be discovered post the listing. After all, the government will still hold nearly 95% of the issue," said the source.
He stated that the government intends to sell a stake of slightly over 5%. A new regulatory approval for the listing procedure will be required, according to the source, who did not clarify. The government has previously stated that a 5 per cent interest will be sold.
According to investment banking sources, the IPO would likely be issued in the first week of May.
There were no comments on the issue in the reports from the Indian finance ministry.
The government had planned to float LIC during the previous fiscal year, which ended March 31, but had to postpone the sale after Russia's invasion of Ukraine caused a market meltdown.
With over 280 million policies, the 66-year-old firm leads India's insurance sector.
In 2020, the most recent year for which figures are available, it was the fifth-largest worldwide insurer in terms of insurance premium collection.
Investors have expressed worry that government demands could influence LIC's investment selections, notably those in loss-making state enterprises.

Christopher J. Mitchell

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