INSUBCONTINENT EXCLUSIVE:
Government has time till May 12 to launch LIC's IPO without filing fresh papers with SEBINew Delhi: Government has time till May 12 to
launch the initial public offer (IPO) of Life Insurance Corporation of India (LIC) without filing fresh papers with markets regulator
Securities and Exchange Board of India (SEBI), an official said.The government's sale of about 31.6 crore shares or 5 per cent stake
in LIC, which was estimated to fetch around Rs 60,000 crore to the exchequer, was originally planned to be launched in March, but the
Russia-Ukraine crisis has derailed the plans as stock markets are highly volatile.On February 13, the government filed the draft red herring
prospectus (DRHP) for the IPO with SEBI, which granted its approval for the same last week."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," an official said.The DRHP filed with SEBI had details of
the financial results of LIC and also the embedded value till September 2021.If the government misses the May 12 window available with it,
LIC would have to file fresh papers with SEBI giving the results of December quarter and also update the embedded value.LIC's embedded
value, which is a measure of the consolidated shareholders value in an insurance company, was pegged at about Rs 5.4 lakh crore as of
September 30, 2021, by international actuarial firm Milliman Advisors
Although the DRHP does not disclose the market valuation of LIC, as per industry standards it would about 3 times the embedded value.The
official further said that although the market volatility has reduced in the last fortnight , it would wait for the market to stabilise
further so that retail investors get confidence to invest in the stock
LIC has reserved up to 35 per cent of its total IPO size for retail investors."The portion reserved for retail investors require about Rs
20,000 crore to come in from retail buyers
Based on our market assessment, currently the retail demand is not as much to bid for the entire quota of shares," the official said.The
government was expecting to garner over Rs 60,000 crore by selling about 31.6 crore or 5 per cent stake in the life insurance firm to meet
the curtailed disinvestment target of Rs 78,000 crore in the current fiscal year
In case the share sale does not happen by March, the government will miss the revised disinvestment target by a wide margin.At 5 per cent
stake dilution, the LIC IPO would be biggest ever in the history of Indian stock market and once listed LIC's market valuation would be
comparable to top companies like RIL and TCS.So far, the amount mobilised from IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore,
followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.The government, however, did not
disclose in the DRHP the discount which will be given to policyholders or LIC employees in the public offering.
