SEBI Eases Listing Rules, Smoothens LIC's IPO Path

The Securities and Exchange Board of India (SEBI) has eased the listing norms for large companies. This will apparently pave the way for LIC’s mega float IPO. This will relax the minimum offer and public holding norms and will provide the Centre more time to comply with rules.

The regulator said large companies can now divest a minimum five percent in the IPO, instead of 10 percent. SEBI has further increased the time from three years to five years, to raise the public float to 25 percent.

Experts believe that the move would encourage large firms to opt for listing.

Sale of LIC stake has been complicated for the government due to its sheer size. A mere 10 percent stake in the company is estimated to be at least Rs.1 trillion, which will be very tough for the market to absorb, three people directly aware of the insurer’s IPO plans said.

SEBI said in a release, “For issuers with post-issue market capital exceeding Rs.1 trillion, the requirement of the minimum public float will be reduced from 10 percent of post-issue market capital (existing provision) to Rs.10,000 crore, plus five percent of the incremental amount beyond Rs.1 trillion. These issuers shall be required to achieve at least 10 percent public shareholding in two years and at least 25 percent public shareholding within five years from the date of listing”.

SEBI’s relaxation’s biggest beneficiary will be LIC that is currently undergoing an evaluation process by actuarial firms.

This decision was taken on Wednesday’s SEBI board meeting, which was also attended by Finance Minister Nirmala Sitharaman and Minister of State (Finance and Corporate Affairs), Anurag Thakur. FM Sitharaman stressed the need for the timely implementation of the capital market-related Budget announcements.

The government is looking to launch LIC’s IPO in the next financial year.