LIC IPO: Govt files draft papers with Q3 financials
NEW DELHI: The government has filed updated draft papers with the Securities and Exchange Board of India (Sebi) for an initial public offering (IPO) of the Life Insurance Corporation of India (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.
As per the updated financials, the Life Insurance Corporation reported a net profit of ₹235 crore in the October-December quarter. The net profit in AprilDecember, 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 316 million or 5% stake in the life insurance firm to meet the curtailed disinvestment target of ₹78,000 crore in the current fiscal. The IPO was originally 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 fresh papers with the Sebi.
LIC’s embedded value, which is a measure of the consolidated shareholders’ value in an insurance company, was pegged at about ₹5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors. Although the DRHP does not disclose the market valuation of LIC, as per industry standards it would be about 3 times the embedded value.
At a 5% stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market and once listed its market valuation 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. In this financial year so far, ₹12,423.67 crore has been garnered through offer for sale, employee OFS, strategic disinvestment and buyback.