[feb]LIC IPO

Question 1

What is Market capitalization?

Answer 1

Number of shares issued X Share price of each share

Question 2

Norms for companies that are getting listed on stock exchange?

Answer 2

• Those companies which are getting listed (and whose market capitalization after listing is more than Rs. 4000 crore) need to offer 10% shares to the public and within 3 years minimum public shareholding should be 25%.
• In this case. LIC Act 1956 will be amended through Finance Act 2021

Question 3

With IPO, will Govt. of India receive money or NOT ?

Answer 3

Yes,3 possible ways

1) Govt. is bringing the IPO of LIC so that LIC can raise money and it should be able to grow and here Govt. do not want money and Money will come to the COMPANY. In this case shares will be issued to the NEW investors and Govt. will retain its shares in the company BUT Govt.’s shareholding (in % terms) will reduce because of the new investors coming in But the value of Govts. share will remain SAME.
2) By brining in IPO of LIC, Govt wants money. In this case, Govt will give its shares to the public and public will pay money to Govt. of India (and Not LIC) and now public/investors will own LIC.
3) combination of Both. In this case Govt. will sell some of its shares to the public/investors and Govt. will get the money but Govt will still retain majority of the shareholding in LIC.
- in case of LIC IPO it is going to be the combination of first and second option both.

Question 4

Meaning When Govt. brings in Initial Public Offer (IPO)?

Answer 4

Government is listing the securities (here shares/equity) of the company (LIC) on the stock exchange. -> 2 ways to do it,given above