Former finance minister P Chidambaram on Wednesday questioned the timing of the initial public offer (IPO) of Life Insurance Corporation (LIC), seeking to know the reason behind the Government's “desperation” to come out with it at the start of a financial year.
Speaking to NDTV, Mr Chidambaram, when asked about his views on the LIC IPO, termed as one of the biggest public issues of the country, said, “it is a wrong time to do an IPO. First you cut down the size of the IPO and have also lowered the offer price. Both indicate that this is not the most propitious time to bring an IPO.”
He wondered as to why the Government was desperate to bring it after it had missed the March 31, 2022 deadline.
“They claim that direct tax collections are robust, then what was the desperation to bring the IPO in the first month of a new financial year? Normally there is no lack of money during the months of April and May of a new fiscal and governments are flush with funds at this time of the year. If you are short of resources, you can do it later. I think it was a completely wrong time to do an IPO," the former finance minister said.
LIC's IPO is set to open on May 2 for anchor investors and from May 4 to May 9 for the general public, the insurance behemoth confirmed earlier in the day at its press conference.
It will be in the price band of Rs 902-949, with a Rs 60 discount to policyholders and a Rs 45 discount for retail investors and employees.
India's largest insurer LIC is likely to list on the stock exchanges on May 17, a week after its mega IPO closes.
Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said that listing of LIC is part of the long-term strategic vision of the government and will highly enhance the value of the corporation in the long-run.
"This (LIC IPO) is right sized, considering the capital market environment and will not crowd out capital supply given the current market environment," Mr Pandey said on Wednesday.
Even after the reduced size of about Rs 20,557 crore, the LIC IPO is going to be the biggest initial public offering ever in the country, he said.