The filing of a draft red herring prospectus (DRHP) by Life Insurance Corporation of India (LIC) has created a "positive buzz in the air" and the public issue will be a very positive development in the history of the country's largest insurer, Union Finance Minister Nirmala Sitharaman said on Monday.
Addressing a media briefing after the Reserve Bank of India's (RBI) board meeting, Sitharaman said, "I can see after the announcement, the reception, there is a buzz in the air."
Moving one step closer to initial public offering (IPO), LIC on Sunday filed draft papers with the market regulator Securities and Exchange Board of India (SEBI).
Responding to a question on the timing of the IPO given the current volatility in the stock markets, the Finance Minister said, "a big decision like this is never a knee-jerk reaction. It is done with consciousness."
As per the DRHP, up to 31,62,49,885 (31.62 crore) equity shares will be on offer through the offer for sale (OFS), representing 5 per cent of the equity stake of Life Insurance Corporation of India.
DRHP, also referred to as offer document, is the preliminary registration document prepared by merchant bankers for prospective IPO-making companies. Among other things, it lists reasons why the company wants to raise money from the public and how the money will be used. It also gives details about the risks involved in investing in the company.
Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said in a tweet on Sunday that the proposed IPO will be a 100 per cent offer for sale by the government and there will be no issue of fresh shares by Life Insurance Corporation of India.
DRHP, LIC, RBI,Nirmala Sitharaman
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