Launch of LIC IPO in India

Warren Buffet once rightly said “An IPO is a negotiated transaction, the seller chooses when to come public and it is unlikely to be a time that’s favourable to you”. An Initial Public Offer (IPO) is nothing but when a company issues fresh securities to public by listing it on stock exchange. The listing of shares happens in the primary market where normally fresh securities are issued. Literally, there is no right time for a company who wants to go public but the timing of its listing may or may not be suitable for the investors. Recently, LIC IPO, which is said to be mother of all IPOs, was listed for the first time on stock markets after lots of hue and cry. By listing, the government wants to dilute its stake in the LIC. The size of IPO was set at ₹ 21, 000/- crore. It resulted in opening of a good number of demat accounts by retail investors in order to bid to IPO. Good thing to note that these investors mainly caters to small cities and towns. IPO provides an option to the investors to diversify their investment portfolio. It helps deepen the market, provide stability to stock prices, bring money of domestic investors and attracts foreign investors to the market. Against this backdrop, LIC will now come under regulatory domain of SEBI. It will induce market discipline and streamline functioning of the LIC. By listing, the government would also earn revenue by diluting its stake which will help reduce fiscal deficit and meet its disinvestment target. IPOs definitely provide a good investment avenue for the investors and help increase financial literacy among the masses. However, before investing, the investors should be aware of market risk involved in such investment and go through the offer documents carefully.