The government has filed updated draft papers with market regulator Sebi for an initial share sale of Life Insurance Corp. Which included the December quarter financials of the insurance behemoth, news agency PTI reported citing an official.
Policyholders and investors are eagerly waiting for clarity on the launch date of Life Insurance Corporation’s (LIC) mega initial public offering (IPO). The much-awaited share sale was earlier expected to hit the markets by March 31.
However, given the market volatility due to the ongoing Russia-Ukraine war, it has forced the government to rethink the launch date. The government is yet to announce a decision in this regard.
LIC IPO has been put off to anywhere between mid-April to May amid volatile markets in the wake of the Russia-Ukraine conflict.
The DRHP got Sebi approval early this month. ”Updated DRHP of LIC with December financials has been filed,” an official said. They also add it was required to be done as per Sebi’s observations.
As per the updated financials, the Life Insurance Corporation reported a net profit of Rs 235 crore in the October-December quarter. The net profit in April-December, 2021, increased to Rs 1,671.57 crore from Rs 7.08 crore a year ago.
The government is expecting to garner over Rs 60,000 crore by selling about 31.6 crores. A 5 percent stake in the life insurance firm to meet the curtailed disinvestment target of Rs 78,000 crore in the current fiscal.
LIC IPO: Listing
The government has time till May 12 to launch the much-awaited public offering with the current draft red herring prospectus (DRHP). Fresh papers will have to be filed with markets regulator Sebi in case the deadline is missed. The valuation will also have to be reworked.
On February 13, the government filed the draft red herring prospectus (DRHP) for the IPO with Sebi, which granted its approval for the same last week.
At a 5 per cent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market. Once listed LIC’s market valuation would be comparable to top companies like RIL and TCS.
So far, the amount mobilized from the IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore. It is followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
LIC IPO: Reserved Portions
The issue is likely to have reservations for eligible employees and LIC policyholders of the company, according to the DRHP. One-third of the anchor portion will be reserved for domestic mutual funds.
The issue would be an offer for sale of 31,62,49,885 equity shares by the government, which holds a 100 per cent stake in the insurance behemoth. A total of 50 per cent of the net issue would be reserved for qualified institutional buyers (QIBs). Whereas non-institutional buyers will have 15 per cent of shares allocated for them. The retail portion has been fixed at 35 per cent of the offer.