The government has filed an updated draft paper with market regulator SEBI for the Life Insurance Corporation’s (LIC) initial public offering (IPO), which incorporates the December quarterly finances for the insurance company, an official said on Monday.
Ahead of the mega IPO, on February 13, the government had filed a draft red herring prospectus (DRHP) with regulators giving details of financial results as of September. DRHP got Sebi’s approval earlier this month.
“The LIC DRHP updated with December finances has been filed,” an official said, adding it needs to be done according to Sebi’s observations.
The Life Insurance Corporation reported a net profit of Rs 235 crore in the October-December quarter according to updated finances. Net profit in April-December, 2021 increased to Rs 1,671.57 crore from Rs 7.08 crore a year ago.
The government expects to raise over Rs 60,000 crore by selling about 31.6 crore or 5 per cent stake in a life insurance firm to meet the investment reduction target of Rs 78,000 crore in the current fiscal.
The IPO was initially planned to launch in March, but the Russia-Ukraine crisis has thwarted the plan because the stock market is highly volatile.
The government has until May 12 to launch an IPO without filing a new paper with the Securities and Exchange Board of India.
The embedded value of LIC, which measures the consolidated shareholder value in insurance companies, was pegged at about Rs 5.4 lakh crore as at 30 September 2021, by international actuarial firm Milliman Advisors.
While DRHP does not disclose the LIC market valuation, by industry standards, it will be about three times the embedded value.
At a 5 per cent stake dilution, LIC’s IPO will be the largest in the history of the Indian stock market. Once listed, its market value will be comparable to leading companies such as RIL and TCS.
So far, the volume mobilized from Paytm’s IPO in 2021 was the largest at Rs 18,300 crore, followed by Coal India (2010) at almost Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
To date, Rs 12,423.67 crore has been raised in the current financial year through offers for sale, employee OFS, strategic disposals and repurchases. The target for the entire fiscal is Rs 78,000 crore.
The investment stripping target has been set at Rs 65,000 crore for the next fiscal year.