Following the Modi government’s surprise stake sale announcement of LIC through an Initial Public Offering (IPO), India is now all set for more such IPOs.
The move comes in the backdrop of the government aiming to set a record disinvestment target for the year 2020-21. Finance Minister Nirmala Sitharaman seeks to earn ₹2.1 lakh crore through disinvestment, nearly double of ₹1.05 lakh crore, the amount she collected last year. Over ₹900 billion rupees is likely to come through share sale of LIC, which is worth ₹31 lakh crore.
A mega IPO like this would be the biggest India has ever seen and could lead to the creation of India’s most-valuable company by stock market value.
The LIC last reported a profit of ₹48,436 crore for FY2018. If its shares are bought on stock exchange, it is possible that the company might overtake Reliance Industries Ltd and Tata Consultancy Services.
Public listing of LIC will boost the markets, influence investment decisions and loan portfolios and lead to better governance besides ensuring greater transparency and accountability.
More IPOs in line
Another mega deal is underway with Tower Infrastructure Trust filing for an IPO of around $3.5 billion. This is a trust that manages the mobile phone towers of Reliance Industries Ltd. As reported by the Bloomberg, Tower Infrastructure Trust will be the largest Indian IPO on record other than LIC IPO.
In 2017, many insurance companies went public, including SBI Life Insurance Co. and General Insurance Corp. of India with deals crossing $1 billion.
International Financing Review reported that SBI Cards and Payment Services is likely to launch an IPO raise more than $1 billion as early as this month.
(With inpurts from agencies)