The initial public offering of the country's largest insurer LIC will open on May 4 and close on May 9, sources said. The IPO, through which the government will sell 3.5 per cent stake in state-owned Life Insurance Corporation (LIC), will fetch Rs 21,000 crore to the exchequer. The IPO values LIC at Rs 6 lakh crore.
Life Insurance Corporation of India (LIC) has increased the size of its shareholders' fund to Rs 6,600 crore from Rs 100 crore in a bid to accommodate a larger shareholder base ahead of its public listing. The size of the fund has been enhanced by retaining two years' of dividend and issuing fresh capital, said an official. Increasing the size of the shareholders' fund will help boost the number of shares for allotment in the insurer's initial public offering (IPO). The corpus represents the amount of equity in a company that belongs to its shareholders.
The government is likely to cut the size of the initial public offering of LIC to 3.5 per cent to raise around Rs 21,000 crore from the issue which would hit the capital markets in the first week of the next month. The government in February had planned to sell a 5 per cent stake in Life Insurance Corporation (LIC). However, the ongoing market volatility due to the Russia-Ukraine war has made it lower the IPO size. At this price, LIC, which is 100 per cent government-owned, is valued at Rs 6 lakh crore.
The Union Cabinet has cleared disinvestment of the country's largest insurer LIC and a panel headed by the finance minister will now decide on the quantum of stake dilution, a senior official said on Monday. The Department of Investment and Public Asset Management (DIPAM) had in January appointed actuarial firm Milliman Advisors LLP India to assess the embedded value of LIC ahead of the IPO (initial public offering), which is touted to be the biggest public issue in Indian corporate history. The Budget amendments to the LIC Act has been notified and the actuarial firm is expected to finalise the embedded value of the life insurer. Under the embedded value method, the insurance company's present value of future profit is also included in its present net asset value.
The government has appointed 10 merchant bankers including Goldman Sachs (India) Securities, Citigroup Global Markets India, and Nomura Financial Advisory and Securities India to manage the mega initial public offering of country's largest insurer LIC. Other selected bankers include SBI Capital Market, JM Financial, Axis Capital, BofA Securities, JP Morgan India, ICICI Securities, and Kotak Mahindra Capital Co Ltd, a circular on the divestment department website said. "Government has finalised the book running lead managers and some other advisors for the IPO of LIC," DIPAM Secretary Tuhin Kanta Pandey tweeted. The divestment department had invited applications for the appointment of merchant bankers on July 15.
The government is mulling allowing foreign direct investment (FDI) in the country's largest insurer LIC, a move which would help overseas investors take part in the company's proposed mega IPO, sources said. The proposal is under discussion between the Department of Financial Services and Department of Investment and Public Asset Management (DIPAM). "Discussions have been going on for the proposal for the last few weeks. "It would also go for inter-ministerial discussions and would also require Cabinet nod," a source said.
The government is likely to file draft papers for the mega initial public offering of LIC with market regulator Sebi by next week, while a portion of the issue would be reserved for anchor investors, a top official said on Wednesday.
The government is likely to take a call on the timing of LIC initial public offering within this week, a senior official said. The sale of 5 per cent stake or 31.6 crore shares in the country's largest insurer was originally planned for in March, but was postponed in view of the geopolitical tension. The government has time till May 12 to launch the IPO without filing fresh papers with markets regulator Sebi. The official said it would be a tough call to decide whether to go ahead with the retail and domestic investor demand or to wait for geopolitical tension to ease and FIIs to return to market.
The government has amended rules of the Foreign Exchange Management Act (FEMA), paving the way for up to 20 per cent foreign direct investment in the insurance behemoth LIC. The government is planning to dilute its stake in LIC through the the Initial Public Offering (IPO). LIC in February had filed the Draft Red Herring Prospectus (DRHP) before the markets regulator Sebi for the IPO.
The government is planning to soon file the final papers for LIC IPO with market regulator Sebi, which will provide details about the price band, discount for policyholders and retail buyers, and the actual number of shares to be put on the block, an official said. The government is presently in the wait-and-watch mode because of the market volatility induced by the Russia-Ukraine war and will decide on the timing of the initial public offering (IPO) of Life Insurance Corporation (LIC). "We have got the approval of the DRHP and the next step would be to file the RHP, which will give details of the price band and the actual number of shares.
Insurance behemoth LIC on Tuesday said it has garnered a little over Rs 5,627 crore from anchor investors led primarily by domestic institutions ahead of its mega initial public offering (IPO). Anchor Investors' (AIs) portion (5,92,96,853 equity shares) was subscribed at Rs 949 per equity share, the insurer said in an early morning filing to exchanges. Out of the allocation of about 5.9 crore shares to AIs, 4.2 crore shares (71.12 per cent) were allocated to 15 domestic mutual funds through 99 schemes, the filing said.
Taking a cue from Zomato's stellar initial public offering (IPO), through which it garnered a valuation of Rs 1 trillion, the government has asked its advisors and valuers to ascertain if the Life Insurance Corporation of India (LIC) should be valued at Rs 10 trillion or more. The government is looking to offload about 10 per cent stake in LIC through the IPO. At that valuation, the government stands to net at least Rs 1 trillion from LIC's proposed IPO, which will boost the Centre's efforts to meet its disinvestment target of Rs 1.75 trillion for the current financial year.
The government is unlikely to come up with the IPO of Life Insurance Corporation (LIC) in the current financial year ending March 2022, as the valuation of the state-owned behemoth is taking more than anticipated time, and the preparatory work is still far from complete. There are still some issues that need to be addressed with regard to the valuation of LIC, a senior official of one of the merchant bankers said. Even after the valuation, there are several regulatory processes that have concluded, the official said.
With the Russia-Ukraine war roiling financial markets globally, the government may defer the mega IPO of LIC and wait for an opportune time to get the maximum value of its holding in the state-owned insurance behemoth, sources said. "It's a full blown war now so we will have to assess the situation for going ahead with the LIC IPO," a government source said. Finance Minister Nirmala Sitharaman, too, had indicated review of the IPO in view of the evolving geopolitical situation.
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