The Centre is ready for the launch of the initial public offerings of the Life Insurance Corporation of India early in May this year according to reports. The government has time left till May 12 this year for the LIC IPO launch date 2022, with seeking new approvals from market regulator SEBI.
It is being said that if the government misses this deadline, then the company would have to file new papers with the Securities Exchange Board of India (SEBI) offering the results of the December quarter and also updating the embedded value, the report added.
LIC IPO Launch: Recent Updates On This Public Offering
The LIC IPO was primarily planned to be released in March this year, but with the prevailing Russia Ukraine crisis, the LIC IPO date postponed. The government filed DRHP (draft red herring prospectus) for the IPO with SEBI on Feb 13, 2022. An official said,
The DRHP that was filed with SEBI included details of the financial results of LIC and also contained the embedded value till September of last year. The embedded value of LIC, which is a mark of the consolidated shareholders’ value in an insurance entity, was backed at nearly ₹5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors. The LIC IPO price has also not been disclosed now.
Even though the DRHP does not reveal the market valuation of LIC, according to industry standards it would be nearly 3 times the embedded value. The Centre was anticipated to garner more than ₹60,000 crores by selling nearly 31.6 crores or 5 percent shares in the life insurance firm to cater to the curtailed disinvestment aim of ₹78,000 crores in the present financial year.
At 5 percent stake dilution, the LIC IPO launch would be the largest ever in the history of the Indian stock market, and once listed the market valuation of LIC would be comparable to top entities such as TCS and RIL. The government, however, did not reveal in the DRHP the discount which will be offered to policyholders of LIC employees in the IPO.
According to norms, up to 5 percent of issue size can be reserved for employees and up to 10 percent for policyholders. During the present financial year, so far ₹12,423.67 crores have been received via OFS, strategic disinvestment, employee OFS, and buyback.
LIC IPO Launch: IPO Size In A Gist
As stated above, the government has time till 12 May this year for the LIC IPO launch as per the draft papers and the DRHP (Draft Red Herring Prospectus). Last week, the government filed the updated draft papers with market regulator SEBI for the IPO of LIC, incorporating the December quarter financials of the insurance behemoth. Here is the LIC IPO size.
- The government is anticipating garnering more than Rs 60,000 crore by selling about 31.6 crores or 5 percent stake in the life insurance company to cater to the curtailed disinvestment aim of Rs 78,000 crore in the present fiscal.
- The embedded value of LIC as stated before, which is a measure of the consolidated shareholders’ value in an insurance entity, was pegged at nearly Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.
- Even though the DRHP does not disclose the market valuation of the company, as per market standards it would be nearly 3 times the embedded value.
At a 5% stake dilution, the Life Insurance Corporation of India IPO would be the largest ever in the history of the Indian stock market and once it is listed its market valuation would be comparable to top entities like Tata Consultancy Services (TCS) and Reliance Industries Limited (RIL). The LIC IPO launch date is expected to be declared soon. In the above article, we have also discussed the LIC IPO lot size and price.