Government Files Updated Draft Papers For LIC IPO

The new draft papers incorporate December Quarter financials

The government has filed updated draft papers with market regulator SEBI for an initial public offer (IPO) of Life Insurance Corporation (LIC), incorporating December quarter financials of the insurance behemoth, an official said on Monday.

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 Sebi approval early this month.

“Updated DRHP of LIC with December financials has been filed,” an official said, adding it was required to be done as per Sebi observations.

The Life Insurance Corporation reported a net profit of ₹ 235 crore in the October-December quarter as per the updated financials. The net profit in April-December, 2021 increased to ₹ 1,671.57 crore from ₹ 7.08 crore a year ago.

The government is expecting to garner over ₹ 60,000 crore by selling about 31.6 crores or 5 per cent stake in the life insurance firm to meet the curtailed disinvestment target of ₹ 78,000 crore in the current fiscal.

The IPO was initially planned to be launched in March, but the Russia-Ukraine crisis has derailed the plans as stock markets are highly volatile.

The government has time till May 12 to launch the IPO without filing new papers with India’s Securities and Exchange Board.

LIC’s embedded value, which measures the consolidated shareholders’ value in an insurance company, was pegged at about ₹ 5.4 lakh crore as of September 30, 2021, by the international actuarial firm Milliman Advisors.

Although the DRHP does not disclose the market valuation of LIC, as per industry standards, it would be about three times the embedded value.

At a 5 per cent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market. Once listed, its market value 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 ₹ 18,300 crore, followed by Coal India (2010) at nearly ₹ 15,500 crore and Reliance Power (2008) at ₹ 11,700 crore.

So far, ₹ 12,423.67 crore has been garnered during the current financial year through offer for sale, employee OFS, strategic disinvestment, and buyback. The target for the entire fiscal is ₹ 78,000 crore.

The disinvestment target has been set at ₹ 65,000 crore for the next fiscal year.