: SEBI clears the decks for mega LIC IPO #FinanceIndia #StockMarketNEWS #Business Will help the government mobilise about `63,000 crore New Delhi: Markets regulator Securities and Exchange Board

@StockMarketNEWS Mon 14 Mar, 2022

Posted in: #FinanceIndia #StockMarketNEWS #Business

SEBI clears the decks for mega LIC IPO #FinanceIndia #StockMarketNEWS #Business
Will help the government mobilise about `63,000 crore

New Delhi: Markets regulator Securities and Exchange Board of India (SEBI) has given approval to mega initial public offering (IPO) proposal of Life Insurance Corporation (LIC) to help the government mobilise about `63,000 crore to meet the disinvestment target for the current fiscal year, sources said.

SEBI has given its nod to draft red herring prospectus (DRHP) filed by LIC on February 13, 2022, sources said.

The go-ahead from the SEBI has come in less than a month, fastest ever to any company.

Going by the DRHP, the initial public offering (IPO) would see sale of 31. 6 crore shares or 5% stake of the government. Also employees and policyholders of the insurance behemoth would get a discount over the floor price.

LIC’s embedded value, which is a measure of the consolidated shareholders’ value in an insurance company, has been 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 or around `16 lakh crore.

The IPO is offer for sale (OFS) by Government of India and there will be no fresh issue of shares by LIC. The government holds 100% stake or over 632. 49 crore shares in LIC. The face value of shares is Rs 10 apiece.

The LIC IPO would be the biggest IPO in the history of Indian stock market and once listed, LIC’s market valuation would be comparable to top companies like RIL and TCS. So far, the amount mobilised from 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.

As per norms, up to 5% of the issue size can be reserved for employees and up to 10% for policyholders. The IPO of LIC is expected by March and the proceeds would be crucial to meet the revised disinvestment target of `78,000 crore for the current fiscal year.

So far, the government has raised `12,030 crore through CPSE disinvestment and Air India strategic sale this fiscal year.

LIC share capital was raised from `100 crore to `6,325 crore during September last year to help facilitate the IPO. Last month, LIC reported a profit after tax of `1,437 crore for the first half of 2021-22 as compared with `6. 14 crore in the year-ago period.

Its new business premium growth rate stood at 554. 1 per cent in the first half of 2021-22, compared with 394. 76% during the year-ago period.

There are currently 24 life insurance companies in India, with LIC being the sole public player.