LIC’s Mega IPO Unlikely This Financial Year: Sources

The initial public offering (IPO) of India’s biggest insurer Life Insurance Corporation of India (LIC) seems unlikely in this financial year 2021-22.

The government may delay the LIC’s mega IPO on market volatility as the Russia-Ukraine conflict rages on, they added.

While the Centre has time until May 12 to launch the LIC IPO without filing fresh papers with markets regulator SEBI, sources stated that the listing is unlikely in early April as financial markets have been whiplashed by the see-saw nature of news flow from the raging Russia-Ukraine conflict.

On February 13, the government had filed the draft red herring prospectus (DRHP) for the IPO with SEBI, which granted its approval for the same last week.

The government plans to sell about 31.6 crore shares or 5 per cent stake in LIC, estimated to fetch around ₹ 60,000 crore to the exchequer.

At 5 per cent stake dilution, the LIC IPO would be biggest ever in the history of Indian stock market and once listed LIC’s market valuation would be comparable to top companies like RIL and TCS.

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 about 3 times the embedded value

LIC has reserved up to 35 per cent of its total IPO size for retail investors.

However, the Centre didn’t disclose the discount which will be given to policyholders or LIC employees in the initial share sale.