The government now has time till 12th May to launch the LIC IPO
and pursuing an updated approval of market regulator SEBI, according to an official.
In case the government misses the 12th May deadline, LIC would have to file new papers with SEBI where the life insurance corporation will have to state the results of the December quarter and also update the embedded value, the official added.
The LIC IPO was originally to be launched in March, but the Russia-Ukraine crisis has put a spanner in the works.
The government had filed the draft red herring prospectus (DRHP) for the IPO with the market regulator SEBI on February 13. “We have a window till May 12 to launch the IPO based on the papers filed with SEBI. We are watching the volatility and will file the RHP giving the price band soon,” the official said.
The DRHP filed with SEBI and gave details of the financial results of LIC and also the embedded value in September 2021.
Contents
LIC’s embedded value
LIC’s embedded value, which is a measure of the amalgamated shareholders’ value in an insurance company, was pinned at about ?5.4 lakh crore as of 30th September, 2021, by the international actuarial firm Milliman Advisors.
But, the DRHP has been strict about not disclosing the market valuation of LIC, according to industry standards it would be approximately three times the embedded value.
The government’s goal with the LIC IPO
The Centre had expected to amass over ?60,000 crore by selling about 31.6 crore or 5% shares in the life insurance firm to meet the decreased disinvestment target of ?78,000 crore in the current financial year.
Biggest IPO in Indian market till date
At 5% stake dilution, the LIC IPO is going to be the biggest IPO in the history of the Indian stock market, and once listed LIC’s market valuation is going to be comparable to top companies like RIL and TCS.
Benefits for LIC employees and policyholders
But in the DRHP, the government has not revealed the discount which will be given to policyholders or to LIC employees in the public offering.
As per norms, up to 5% of issue size might be reserved for employees and up to 10% might be reserved for the policyholders. Until now in the current financial year ?12,423.67 crore has been obtained through OFS, employee OFS, calculative disinvestment and buyback.
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