Latest updates reveal that the central government is prepared to file the draft papers of the initial public offering (IPO) of Life Insurance Corporation of India (LIC) with the market regulator by this week.
LIC – India’s largest IPO
The much-awaited LIC IPO is going to be India’s largest IPO as its value has been finalized over Rs 5 lakh crore.
The draft prospect will be filed once the insurance regulator gives a green signal for India’s biggest-ever IPO, said Tuhin Kanta Pandey, Secretary to the Department of Investment and Public Asset Management (DIPAM).
Further adding that the size of the issue will be mentioned in the draft paper.
It is noteworthy here that a portion of the LIC IPO will be reserved for the anchor investors.
Along with around 10 percent of the LIC IPO would be set aside for the LIC policyholders, Pandey said.
LIC IPO Date & Valuation
The much awaited LIC IPO is expected to hit the stock market by March.
According to Pandey, “the embedded value could be more than Rs 5 lakh crore and the enterprise value will be multiples of that,”.
In terms of valuation, for LIC IPO, the valuation will be around three to five times the embedded value.
In simple words, the valuation of this mega IPO could be around Rs 15 lakh crore.
That being said, the IPO will be crucial to meet the central government’s disinvestment target as it will help the government to bring down the fiscal deficit target of 6.9 percent of GDP for FY22 by a notch.
Significance Of LIC IPO
This fiscal year, the government has garnered a target of over Rs 12,000 crore from divestments.
In simple words, the Center is relying on LIC IPO to meet the disinvestment target.
Considering the Rs 15 lakh crore valuation, a 5-10 per cent stake sale could fetch up to Rs 1.5 lakh crore.
Sources say that the center may sell up to 10 per cent share of LIC IPO.
So far, Pandey has declined to comment on the size of stake the government is planning to offload in the first round.
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