The Supreme Court has refused to grant interim relief against several petitions challenging the legality of initial public offering of Life Insurance Corporation (LIC) of India. This means the issue will not be stayed and the share allocation process and the rest of the stake sale process will continue as scheduled.
The bench ruled that no case of interim relief has been made out, and thus, no stay order will be issued against the LIC IPO.
One of the petitioners had questioned the constitutional validity of certain provisions of the Finance Act, 2001 and Life Insurance Corporation (LIC) Act, 1956. The plea challenged that these provisions were introduced as a money bill even though they did not fall under Section 110 of the Constitution of India.
The Supreme Court bench of justices DY Chandrachud, Surya Kant and PS Narasimha ruled that the issue of enacting the provisions as money bill is already pending before the Constitution bench of the apex court. Therefore, this case will also be tagged along with the pending matter.
While the bench did not issue a stay on the IPO, it did order the central government to submit its response on the petitions against LIC IPO within four weeks. The petitioner will be allowed to file their counter-responses in the subsequent four weeks.
The order comes as the allocation process for the LIC IPO is underway. The issue opened on May 4 and closed on May 9, receiving tremendous response from investors. The policyholder portion of the IPO has been subscribed 6.11 times, while the portion reserved for employees was subscribed 4.39 times. Retail investors bid 1.99 times the allocated bucket, and non-institutional investors’ portion was subscribed 2.91 times.
The anchor investor portion, which opened on May 2, was also oversubscribed. The central government has raised over ₹5,627 crore from anchor investors.
The Centre is planning to dilute its 3.5% stake in LIC to raise around ₹21,000 crore at the upper limit of the price band, making it the biggest IPO in the history of India. The issue size was revised downwards from 5% on account of severe market volatility. Under the issue, 221,374,920 equity shares at a face value of ₹10 apiece are up for grabs. The price band of the issue was fixed at ₹902 to ₹949.
Once the allotments are completed today, refunds to unsuccessful bidders will be initiated on May 13. The shares will be credited to demat accounts of successful bidders on May 16. The shares of LIC will be listed on the exchanges the next day, on May 17.