Govt has time till May 12 to launch LIC IPO without filing fresh paper with Sebi

If the government misses the May 12 deadline, LIC would have to file fresh papers with Sebi giving the results of the December quarter and also update the embedded value, the official added.

The LIC IPO was originally planned to be launched in March, but the Russia-Ukraine crisis has derailed the plans.

The government filed the draft red herring prospectus (DRHP) for the IPO with Sebi on February 13. “We have a window till May 12 to launch the IPO based on the papers filed with Sebi. We are watching the volatility and will file the RHP giving the price band soon,” the official said.

The DRHP filed with Sebi had details of the financial results of LIC and also the embedded value till September 2021.

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.

The Centre was expected to garner over ₹60,000 crore by selling about 31.6 crore or 5% shares in the life insurance firm to meet the curtailed disinvestment target of ₹78,000 crore in the current financial year.

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

The government, however, did not disclose in the DRHP the discount which will be given to policyholders or LIC employees in the public offering.

As per norms, up to 5% of issue size can be reserved for employees and up to 10% for policyholders. During the current financial year, so far ₹12,423.67 crore has been obtained through OFS, employee OFS, strategic disinvestment and buyback.