Is it true that the regulator has proposed some fresh policy changes to smoothen the IPO process for LIC of India?

While the LIC IPO may not have been the ostensible purpose of this move, the latest announcement made by SEBI is surely going to make life easier for the LIC IPO in terms of smoothening the IPO process for the mega issue. In what could be the first step to smoothen the IPO process for LIC, SEBI has eased listing norms for large companies.

Let us look at what is the gist of the new announcement made by SEBI. Under the proposed new rules, large companies as measured by post issue market capitalization will be allowed to divest 5% of equity instead of the mandatory 10% that is the norm today for all cases. Also, these large companies will get 2 additional years to touch the 10% divestment limit.

Currently, such companies are required to touch 25% public holding in a span of 3 years. Instead, that time period has also been extended to 5-years to touch 25% public ownership. These new set of rules will be applicable for companies with a potential market cap post listing of above Rs.100,000 crore calculated as the product of the issue price and the number of shares outstanding of the company.

Above all, it is expected that this will pave the way for removal of regulatory hassles when LIC is divested during the current fiscal. LIC plans to divest not more than 10% and that also it may prefer to do in tranches due to the size of the issue and the uncertainty about the appetite for such a large company. This should come as a leg-up for the LIC IPO and is a clear indicator that the government is leaving no stone unturned to push the issue through.