The government is likely to cut the size of the initial public offering (IPO) of LIC to 3.5% to raise around Rs 21,000 crore from the issue, which would hit the capital markets in the first week of the next month. The government in February had planned to sell a 5% stake in Life Insurance Corporation (LIC). However, the ongoing market volatility due to the Russia-Ukraine war has made it lower the IPO size.
At this price, LIC, which is 100% government-owned, is valued at Rs 6 lakh crore. LIC is likely to file the red herring prospectus with market regulator Sebi by Wednesday, April 27. "LIC IPO is likely to come to the market in May first week. 3.5% stake dilution, subject to regulatory approval," an official said. Reservations for policyholders and employees, and discounts, issue dates and issue price will be known by Wednesday, the official added.
In February, LIC had filed draft papers with Sebi wherein it had said that the government will sell 5% stake or 31.6 crore shares in the state-run insurer. LIC's embedded value, which is a measure of the consolidated shareholders value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.
LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal. The government has pegged disinvestment receipts at Rs 65,000 crore in the current fiscal, up from Rs 13,531 crore raised in the last fiscal.