LIC IPO Final Papers: The central government is soon planning to submit the final documents to the market regulator SEBI regarding the Initial Public Offer (IPO) of the country’s largest insurance company LIC (Life Insurance Corporation of India). These documents will contain information about the price band, discounts for policyholders and retail investors and the actual number of shares.
Due to the volatility in the market due to the Russo-Ukraine war, the government wants to wait for some time to bring this IPO and only then will decide when to bring LIC’s IPO.
“The draft paper (DRHP) has been approved by SEBI. Now the next step would be to file a Red Herring Prospectus (RHP). It will contain information related to the price band and the actual size of the IPO. We are currently monitoring the situation,” an official said. Decision on the date of IPO will be taken soon.
LIC had submitted the draft papers of the IPO with SEBI on February 13, 2022, which has been approved by the market regulator. This has cleared the way for bringing a public issue.
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The LIC IPO is expected to help the government raise Rs 60,000 crore to meet its disinvestment target for the current financial year. According to the DRHP, under the IPO, the government will sell 316 million equity shares of LIC or its 5 percent stake in the company. If this sale does not happen in March, the government will fall short of its revised disinvestment target for the current financial year.
According to the draft paper, Milliman Advisors, an international valuation company, has worked out the embedded value of LIC. The embedded value of the company as on 30 September 2021 was Rs 5.4 lakh crore. The market valuation of LIC is not disclosed in the embedded value. However, by industry standards, it would be nearly three times the embedded value or Rs 16 lakh crore.
The government has 100 percent stake or more than 632.49 crore shares in LIC. The face value of these shares is Rs 10 per share.
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