LTCG tax fuels rush to go public before financial year end

There seems to be a heavy rush in the IPO market as a number of companies have queued up for a public float before the financial year ends.
Image for representational purpose only.
Image for representational purpose only.

CHENNAI: There seems to be a heavy rush in the IPO market as a number of companies have queued up for a public float before the financial year ends. Part of the reason for the IPO rush this month, some experts say, is the new 10 per cent tax on long-term capital gains (LTCG), effective from April 1. In a record year, IPOs worth Rs 82,500 crore are expected to be completed in FY18.

ICICI Securities Ltd, the brokerage and investment banking arm of ICICI Bank Ltd, on Friday said it will launch its Rs 4,017 crore initial public offering (IPO) on March 22.

According to an analyst in a domestic brokerage firm, “..this will be a bonus for anyone who sells in an IPO now as the markets have come off sharply from its peak. Adding to that, one will also be exempted from paying LTCG tax.”

The company has set a price band of Rs 519-520 per share for the IPO. At the upper end of the price band, the share sale values the company at Rs 16,751 crore. The offer will close on March 26. The firm will be the third entity from the ICICI Group to go public.

According to Chanda Kochhar, chairperson of ICICI Securities, the company has been the largest equity broking firm since 2014.

“We will continue to grow on the back of technological innovation and our growing network.”

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