Congress red flags LIC IPO, asks Centre to respond to its 4 questions

NEW DELHI: The Congress on Tuesday launched a sharp attack on the government over the move to sell 3.5%, or 221.3 million shares of Life Insurance Corporation, accusing the government of selling the shares at less than their market value.

“The intent, purpose and modus operandi of government’s desperation to list LIC IPO despite lower valuation permission to take into account key valuation indices, global uncertainties and a volatile market is deeply intriguing and highly questionable. That’s our only objection,” Randeep Singh Surjewala said.

Surjewala said the Centre is “partially disinvesting” the major insurance company on the eve of ‘Akshaya Tritiya’, a day when new trades and businesses are kick-started.

.The government has set the price band for the initial share sale of state-run Life Insurance Corp. of India (LIC) at ₹902- 949 a share, with a ₹60 discount for policyholders and ₹45 for employees. According to the government’s revised estimates, LIC is valued at ₹6 lakh crore, which is just 1.1 times its original embedded value of ₹5.39 lakh crore

A Reuters report on Tuesday said the LIC’s initial public offering has gotten off to a strong start, with 59.3 million shares that were set aside for anchor investors being subscribed at ₹949 apiece. Anchor investors are high-profile institutional investors that are allotted shares before the subscription opens for retail and other investors. LIC’s offering is set to open for other investors on May 4 and will close on May 9.

Surjewala said the Congress has four big questions for the government on the IPO, including the timing of the public offering.

The Congress asked why the LIC valuation of ₹12-14 lakh crore in February was reduced to ₹6 lakh crore in just two months, why the government reduced the LIC’s valuation after roadshows in India and aborad, why the government has ignored LIC’s key indices and also questioned the rush to sell its shares when the domestic and global financial markets are in a turmoil due to the Russia-Ukraine war.