LIC IPO gets SEBI approval: Life Insurance Corporation of India (LIC) on Tuesday has received capital markets regulator Sebi’s approval to raise funds through an initial share sale, sources told CNBC-TV18. LIC had in February filed its draft papers with the market regulator.
As per the DRHP, the insurance behemoth will have up to 31,62,49,885 (31.62 crore) equity shares of the face value of Rs 10 on offer through the offer for sale (OFS), representing 5 per cent of equity stake. Shares of LIC are proposed to be listed on leading stock exchanges including the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
LIC IPO: Reserved Portions
The issue is likely to have reservations for eligible employees and LIC policyholders of the company, according to the DRHP. One-third of the anchor portion will be reserved for domestic mutual funds.
LIC IPO: Delay In Listing Date
A cloud of uncertainty hangs over the initial public offering of the country’s largest insurer due to the ongoing Russia-Ukraine war. After the Union Budget 2022, it was expected that the much-awaited IPO of LIC would hit the market in March. However, in the wake of the share market volatility caused by the raging conflict between Moscow and Kyiv, there might be a rethink on the timing of the LIC share sale.
The government will take a call on the IPO of the country’s largest insurer LIC in the “best interest of the investors”, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said.
“There are certain unanticipated events which have taken over right now. We are closely watching the market and certainly whatever the government will do, we will do in the best interest of the investors and also the IPO,” Pandey said.
LIC IPO: Why Govt Has Been Eyeing The March Timeline?
The government was expecting to garner Rs 63,000 crore by selling a 5 per cent stake in the life insurance firm. A 5 per cent stake sale in LIC, which could have fetched Rs 65,000-70,000 crore, was enough to achieve the revised (RE) disinvestment receipt target of Rs 78,000 crore (down 56 per cent from the Budget estimate of Rs 1.75 lakh crore) for FY22. Without the LIC IPO, the government’s disinvestment receipts could be just Rs 15,000-20,000 crore in FY22. The government had set a modest Rs 65,000 crore disinvestment target for FY23.
LIC IPO: Embedded value
The DRHP disclosed the LIC’s embedded value at Rs 5,39,686 crore as of September 30, 2021. For life insurers, one of the most effective ways of calculation is through Embedded Value (EV) to arrive at their IPO value. The EV is the sum total of the present value of all future profits from existing business plus net worth, which includes capital.
LIC IPO: Financials
The insurer posted a profit after tax of Rs 1,504 crore for the first six months ended September 30, 2021. The figure stood at Rs 2,974.14 crore and Rs 2,710.48 crore in FY21 and FY20, respectively.
LIC IPO: India’s Biggest IPO
The LIC public issue would be the biggest IPO in the history of the Indian stock market. 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.
Kotak Mahindra Capital Company, Axis Capital, BofA Securities, Citigroup Global Markets, Nomura Financial Advisory, Goldman Sachs (India) Securities, ICICI Securities, JM Financial, JP Morgan India Private Limited, and SBI Capital Markets are the book-running lead managers for the issue. On the other hand, KFin Technologies Private Limited is the registrar to the offer.
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