LIC valuation for IPO by May -end

The government is likely to complete valuation of Life Insurance Corp of India by end of May, ahead of the initial public offering of the sta te-owned insurance behemoth.

"The embedded value will be decided based on the advice of the actuarial firm ," a senior finance ministry official told Informist.

The valuation of insurance companies is done on embedded value.

In this system present value of future profit is also added to the net asset value of an insurer.

The government has appointed actuarial firm Milliman Advisors LLP India for assessing embedded value of LIC ahead of the IPO, likely to be the largest public issue in Indian history.

Department of Investment and Public Asset Management Secretary Tuhin Kanta Pandey said the government is planning to complete the listing of the life insurer in the second half of next financial year starting April.

Pandey, however, said the government has not yet decided on the siz e of the proposed IPO . Accor ding to the Securities and Exchange Boar d of India's regulations, a compan y must dilute a minimum of 10% stake through an initial public offering.

However, in a consultation paper floated in November, the regulator mooted reducing the minimum public offer requirement to 5% for companies with market capitalisation of over 100 bln rupees. "Since the LIC IPO is likely to be a huge one, we will look to divest 5-10%," the official said.