Some more updates have emerged on the public issue of Life Insurance Corporation of India (LIC). The government is expected to sell five percent of its stake in the company through its Initial Public Offering (IPO).
As per the draft red herring prospectus (DRHP) of the public issue filed with the Securities Exchange Board of India (SEBI), the government will put 316,249,885 equity shares of LIC on sale. The issue will be an offer-for-sale only.
A Twitter post by the Secretary of Department of Investment and Public Asset Management (DIPAM) states that “The IPO is 100% OFS by GOI and no fresh issue of shares by LIC. For filing valuation about 31.6 cr shares are on offer representing 5% equity.”
View the tweet here:
The IPO is 100% OFS by GOI and no fresh issue of shares by LIC
For filing valuation about 31.6 cr shares are on offer representing 5% equity. pic.twitter.com/UizbeiPloD
— Secretary, DIPAM (@SecyDIPAM) February 13, 2022
The equity shares of the insurance company will have a face value of Rs 10, as per reports.
Many experts assume that LIC’s public issue is expected to fetch about three times its embedded value, according to a report in Business Today. Embedded value means the sum total of net worth, including capital, as well as the present value of all future profits from existing business.
As per a report in Live Mint, the IPO is expected to fetch up to about Rs 71,000 crore in terms of calculated embedded value. The embedded value of LIC was around Rs 5.4 lakh crore on 30 September 2021.
The Centre owns 100 percent stake in LIC presently. The public issue of the country’s largest insurer is crucial for the government’s disinvestment targets. The Union government aims to raise Rs 1.75 lakh crore this fiscal through disinvestment in public sector units and banks.
The Centre has raised about Rs 12,000 crore till now from stake sale in other state-run units and privatisation of national carrier Air India.
The IPO of LIC is expected to be the largest in the country till date. The public issue and listing of LIC shares on the bourses is expected to take place next month.
The public issue will be managed by JP Morgan India Pvt Ltd, JM Financial Ltd, Axis Capital Ltd, Goldman Sachs (India) Securities Pvt Ltd, Nomura Financial Advisory and Securities (India) Pvt Ltd and SBI Capital Market Ltd among others.
In the first half of the financial year 2021-22, LIC had managed to gain a profit after tax of Rs 1,437 crore. It is the largest asset manager in the country and is ranked 10th worldwide in terms of total assets.
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