State-owned insurance behemoth Life Insurance Corporation of India’s (LIC’s) board will meet on Friday to consider the insurer’s proposed listing as its mega IPO is scheduled to be completed this fiscal by March 31.
India’s largest life insurance company’s draft red herring prospectus (DRHP) for the proposed initial public offering (IPO) will be filed with the Securities and Exchange Board of India (Sebi) after the board approval.
“Key decisions on how much discount will be offered to policyholders in upcoming issue may also get cleared in the meeting tomorrow (Friday),” a person with knowledge of the matter told ET.
The insurance regulator—Insurance Regulatory and Development Authority (IRDAI)—has approved the IPO of the LIC, paving the way for the public sector titan’s listing. Also, a formal communication on this is likely soon.
Worth mentioning here is that LIC’s IPO will be India’s largest-ever share sale, beating fintech startup Paytm (One97 Communications), which raised Rs 18,300 crore in November last year. LIC can offer as much as a 5% discount to its policyholders and reserve up to 10% of the issue size for them. The government plans to offload around 5-10% cent stake through the IPO, depending on its valuation.
Last week, Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kanta Pandey mentioned that the DRHP will be filed in the ongoing week.
In the Budget 2022-23 announced last week, the Centre lowered the receipts from disinvestment proceeds in the next financial year to Rs 65,000 crore. At the same time, the revised estimates for disinvestment proceeds in the current year has been cut from Rs 1.75 lakh crore to Rs 78,000 crore.
The government has raised Rs 12,029 crore through stake sales this fiscal year so far. LIC’s public offer is likely to be the biggest ever in India and aid the government reach the revised disinvestment target for the year.
Foreign investors will be able to participate in the IPO with the Centre exploring options to make changes to the foreign direct investment regime ahead of the public listing.
Several media reports mentioned that the government is eyeing a valuation of more than Rs 13 lakh crore to Rs 14 lakh crore for LIC. The country’s largest player in the life insurance market embedded value (EV) is at more than Rs 5. 4 lakh crore. Even with a conservative multiple of 2. 5 times, the value of the company would be about Rs 13. 5 lakh crore. At this valuation, a 5% offload would raise Rs 67,000 crore.
