Rs 60,000 Crore LIC IPO Can Launch On March 11th? India’s Biggest IPO Details..

The LIC IPO, set to be the country’s biggest ever at $8 billion, is expected to open on March 11.

Timeline 

It will open for anchor investors first and for bidding by other investors a couple of days later.

At $8 billion it is set to be the third largest insurance IPO globally.

The IPO is expected to gain regulatory approval by the first week of March.

The next step will be setting an indicative marketing price band.

Significance

The public listing will be a test of the depth of capital markets in India, where equity deals worth more than a couple of billion dollars are rare.

The biggest IPO so far was worth $2.5 billion by Paytm last year.

The upcoming offering has battered shares in other listed Indian insurers as investors trim their holdings to make space for LIC.

DRHP Reveals Details

The IPO launch schedule could change, though the issuer is working at meeting those timelines.

Investor roadshows for the offering started earlier this week.

It filed its draft red herring prospectus (DRHP) with the Securities Exchange Board of India (SEBI) on Sunday.

According to the DRHP, the Centre which owns 100% stake in LIC will offload about 316,249,885 equity shares, representing 5% of the company.

Embedded Value

This pegs the IPO size at anywhere between Rs 60,000 crore and Rs 70,000 crore — the biggest in the country.

Its embedded value (EV) is a metric used to determine the valuation of insurance companies. It is the present value of future profits and the insurer’s net worth.

LIC’s EV as on September 30, 2021 stood at Rs 5.4 lakh crore.

Overtaking Reliance To Become #1

However, the government could put the market value of LIC at 4x the EV, which takes its market capitalisation to around Rs 22 lakh crore.

This will make LIC the most valuable company in India after overtaking Reliance Industries, which has a market cap of Rs 16.39 lakh crore.

The government is rushing to complete the IPO by the end of March to meet its 2021/22 fiscal deficit target of 6.4% of GDP.

Meeting Reduced Fundraising Target

Meeting this target is contingent on the Centre raising around 600 billion Indian rupees ($8.03 billion) from the issue.

It had significantly cut short its divestment and privatisation plans for the fiscal year ending March 31 to 780 billion rupees from 1.75 trillion.

Till date it has raised approximately Rs 12,000 crore through privatisation of Air India and stake sale in other public sector units.