LIC IPO: Govt files draft papers to sell 5 per cent for around Rs 63,000 crore

Setting the stage for the countrys biggest ever public offering Life Insurance Corporation on Sunday filed draft papers with capital market regulator SEBI for the sale of 5 per cent stake by the government for an estimated Rs 63000 croreThe initial public offering of over 316 crore shares or 5 per cent government stake is likely to hit the Dstreet in March and employees and policy holders of the insurance behemoth would get a discount over the floor priceAccording to the draft red herring prospectus LICs embedded value which is a measure of the consolidated shareholders value in an insurance company has been pegged at about Rs 54 lakh crore as of September 30 2021 by international actuarial firm Milliman AdvisorsAlthough 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 Rs 16 lakh croreThe DRHP of LIC IPO has been filed today with the SEBI For filing valuation about 316 crore shares are on offer representing 5 per cent equity Department of Investment and Public Asset Management DIPAM Secretary Tuhin Kanta Pandey tweetedMerchant banking sources said the government is expecting to garner up to Rs 63000 crore about USD 8 billion from the IPOThe IPO is offered for sale OFS by the Government of India and no fresh issue of shares by Life Insurance Corporation LIC The Government holds 100 per cent stake or over 63249 crore shares in LIC The face value of shares is Rs 10 apieceThe LIC IPO would be the biggest IPO in the history of the Indian stock market and once listed LICs market valuation would be comparable to top companies like RIL and TCSSo far the amount mobilised from IPO of Paytm in 2021 was the largest ever at Rs 18300 crore followed by Coal India 2010 at nearly Rs 15500 crore and Reliance Power 2008 at Rs 11700 croreLIC has 66 per cent market share in new business premiums with 283 million policies and 135 million agents as of March 31 2021 Pandey addedThe 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 per cent of issue size can be reserved for employees and up to 10 per cent for policyholdersThe IPO of LIC is expected by March and the proceeds would be crucial to meet the revised disinvestment target of Rs 78000 crore in the current fiscalSo far the government has raised Rs 12030 crore through CPSE disinvestment and Air India strategic sale this fiscalLife Insurance Corporation LIC share capital was raised from Rs 100 crore to Rs 6325 crore during September last year to help facilitate the IPOLast month LIC reported a profit after tax of Rs 1437 crore for the first half of the financial year 202122 as compared with Rs 614 crore in the yearago periodIts new business premium growth rate stood at 5541 per cent in the first half of 202122 compared with 39476 per cent during the yearago periodThere are currently 24 life insurance companies in India with LIC being the sole public player The size of the Indian life insurance industry was Rs 62 lakh crore on a totalpremium basis in fiscal 2021 up from Rs 57 lakh crore in fiscal 2020This story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever