LIC IPO: The central government may submit the draft of the initial public offer (IPO) of Life Insurance Corporation (LIC) with the paper market regulator SEBI by the end of this week. This has been claimed in several media reports. The embedded value of India’s largest IPO has been fixed at over 5 lakh crores. Department of Investment and Public Asset Management (DIPAM) secretary Tuhin Kant Pandey had earlier told that the draft paper of LIC’s IPO will be submitted after getting the green signal from the insurance regulator. Pandey said the size of the IPO will also be mentioned in the draft paper.
A part of LIC’s much-awaited IPO will be reserved for anchor investors. Pandey said that about 10 percent of LIC’s IPO will be set aside for LIC policyholders.
When will LIC’s IPO come?
Tuhin Kande told in an interview to Financial Express that the government may submit the draft paper of LIC’s IPO with SEBI on Thursday or Friday. Pandey said the draft paper for the IPO could be cleared within a few days as the preparatory work has already been completed in consultation with SEBI. LIC’s IPO is expected to launch by March 31, once the draft paper is approved.
Valuation of LIC’s IPO
Tuhin Kant Panda recently said, “The embedded value of LIC may exceed Rs 5 lakh crore and its enterprise value will be determined on the basis of a multiple of this.” The valuation of LIC IPO can be 3 to 4 times its embedded value.
Also read- Adani Wilmar’s stock rose by 19%, what should be the investment strategy now?
Size of LIC IPO
The central government has set a revised target of raising Rs 78,000 crore through disinvestment in the current financial year. So far, the government has raised about Rs 12,000 crore through disinvestment. In such a situation, the central government is now dependent on the amount received from LIC’s IPO to meet its disinvestment target.
If the government decides to sell 5 per cent stake in LIC at a valuation of Rs 15 lakh crore, then it can raise around 75 thousand crores from this issue, which will also exceed its disinvestment target. Tuhin Kant Pandey told that while submitting the draft paper of LIC, information about its size will be given.
The share will be reserved for foreign investors and policyholders.
To ensure the success of this mega IPO, the central government is also in the process of involving foreign investors. According to sources, the government is considering a proposal for foreign investors to hold 20 percent stake in LIC. For this, the government is in the process of amending the FDI rules so that investors can buy stake through the automatic route without the government’s permission.
Apart from this, according to a report by ET Now, LIC has approached anchor investors to raise around Rs 25,000 crore before the IPO. Sources said that the government will reserve 5-10 per cent share at a discount rate for policyholders.
,