India’s largest insurer Life Insurance Corporation has filed draft papers with capital market regulator Sebi for the sale of 5 per cent stake by the government for an estimated Rs 63,000 crore.
“The DRHP of LIC IPO has been filed today with the SEBI. For filing valuation about 31.6 crore shares are on offer representing 5 per cent equity,” Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey tweeted.
The IPO bid is a part of government’s wider privatisation drive aimed at replenishing public coffers drained by covid-19 pandemic. At 40 crore insurance policyholders, LIC covers almost 30% of the Indian population. There are currently 24 life insurance companies in India, with LIC being the sole public player. Here is what you need to know about the mega-IPO
1) According to the draft red herring prospectus, LIC’s embedded value has been pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.
2) Although the DRHP does not disclose the market valuation of LIC, as per industry standards it would be about 3 times the embedded value or around Rs 16 lakh crore.
3) The LIC IPO would be the biggest IPO in the history of Indian stock market and once listed LIC’s market valuation would be comparable to top companies like RIL and TCS.
4) Kotak Mahindra Capital Company Limited, Axis Capital Limited, BofA Securities India Limited, Citigroup Global Markets India Private Limited, and Nomura Financial Advisory and Securities (India) Private Limited are the lead managers for this much-awaited IPO of LIC.
5) 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.LIC has 66 per cent market share in new business premiums with 283 million policies and 1.35 million agents as of March 31, 2021.
Also Read:_Blackstone acquires majority stake in wealth management firm ASK
6) The IPO of LIC is expected by March and the proceeds would be crucial to meet the revised disinvestment target of Rs 78,000 crore in the current fiscal. The government has raised just Rs 12,030 crore by selling stakes in various state-owned entities this financial year.
7) Last month, LIC reported a profit after tax of ₹ 1,437 crore for the first half of the financial year 2021-22 as compared with ₹ 6.14 crore in the year-ago period.
(with agency inputs)
