The wait for the launch of Life Insurance Corporation of India’s (LIC) initial public offer (IPO) is getting longer as the government is yet to announce an official date. The IPO was supposed to hit the market before March 31, 2022 but the launch was delayed due to market volatility following Russia’s invasion of Ukraine.
The government is expecting to garner Rs 60,000 crore through the IPO of LIC. Investors and LIC policyholders must know a few important details before applying for shares when the IPO hits the market.
LIC DRAFT PAPERS
In the run-up to the mega IPO, on February 13, the government had filed the draft red herring prospectus (DRHP) with the regulator giving details of financial results till September. The DRHP got Securities and Exchange Board of India’s (Sebi) approval.
Again in March, the government filed updated draft papers in which the December quarter financials of LIC were incorporated.
As per the updated financials, the Life Insurance Corporation reported a net profit of Rs 235 crore in the October-December quarter. The net profit in April-December, 2021, increased to Rs 1,671.57 crore from Rs 7.08 crore a year ago.
LIC IPO DATE
The government has time till May 12 to launch the LIC’s IPO without filing fresh papers with the Sebi.
LIC IPO SIZE
The government is expecting to garner over Rs 60,000 crore by selling about 31.6 crore or 5 per cent stake in LIC to meet the curtailed disinvestment target of Rs 78,000 crore in the current fiscal.
LIC IPO 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 be about 3 times the embedded value.
BIGGEST IPO IN INDIA
At a 5 per cent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market and once listed its market valuation would be comparable to top companies like RIL and TCS.
So far, the amount mobilised from the 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.