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LIC IPO: An Empirical Study

Summary:
Students of IIT Delhi -Asim Rajvanshi, Yash Garg, Suhani Jain, Nehal Chanchan and Himanshu Rajput analyse LIC”s IPO case. The motivation of the leadership behind the IPO and its lack of credibility should also be considered in the valuation process. When the motivation is just disinvestment and not a single mention of scaling up the business, it will have to be seen if it is able to attract the bigger investors. Critical thing is this time LIC would not be around to bail LIC out if it struggles to raise interest as was the case with GIC or New India. One of the most important things that the government should do is to take action on the role of LIC as its lender of last resort. One of the most basic things that it can do is to release a buyback scheme, wherein if LIC is used to bail

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Students of IIT Delhi -Asim Rajvanshi, Yash Garg, Suhani Jain, Nehal Chanchan and Himanshu Rajput analyse LIC”s IPO case.

The motivation of the leadership behind the IPO and its lack of credibility should also be considered in the valuation process. When the motivation is just disinvestment and not a single mention of scaling up the business, it will have to be seen if it is able to attract the bigger investors. Critical thing is this time LIC would not be around to bail LIC out if it struggles to raise interest as was the case with GIC or New India. One of the most important things that the government should do is to take action on the role of LIC as its lender of last resort. One of the most basic things that it can do is to release a buyback scheme, wherein if LIC is used to bail out a company by the will of the government, and moving forward, the shares only lose value, then the government should buy back the shares at their original price. This will help boost the investor confidence.

Amol Agrawal
I am currently pursuing my PhD in economics. I have work-ex of nearly 10 years with most of those years spent figuring economic research in Mumbai’s financial sector.

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