LIC’s mammoth IPO may happen in two parts, as government reportedly believes market may not have the capacity to absorb it in one go

• Upcoming LIC IPO may be split into two offerings as the government believes the market may not have the capacity to absorb the large issue in one go.
• The government is reportedly planning to mobilise ₹1 lakh crore through the public issue.
• LIC IPO will be the country’s biggest in history.

The government may split the Life Insurance Corporation of India’s (LIC) initial public offering (IPO) into two parts with a gap of a few months as it believes the market may not have the capacity to absorb such a massive offering, as per a media report.

Life insurance giant LIC is looking to raise ₹1 lakh crore through the public issue, said a report by The Times of India, quoting sources it did not name.

While this will be the largest public offering the country has ever seen, it will also be the first ever IPO to open in two parts.

Officials involved in the IPO process believe that with so many offers already closed and several others in the pipeline till the LIC offer comes to the market, a large amount of investors’ funds will already be absorbed, said the report.

Also, the IPO is seen to have cornerstone investors, marquee asset managers who could put in large funds ahead of the IPO. Usually, government-owned companies don’t opt for any type of share placement with investors before an offer.

The term cornerstone investors is generally understood to refer to that class of investors who commit in advance to invest a fixed amount of money, or for a fixed number of shares, in an IPO.

In this year’s union budget, Finance Minister Nirmala Sitharaman had said that the LIC IPO would be completed this fiscal (FY22).

So far 41 IPOs have already been listed on the BSE in 2021.

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