Lagatar24 Desk
New Delhi, Mar 21: The central government has filed updated draft papers with market regulator SEBI for an initial public offering (IPO) of Life Insurance Corporation (LIC), which included the insurance behemoth’s December quarter financials, according to an official.
On February 13, in the run-up to the massive IPO, the government filed a draught red herring prospectus (DRHP) with the SEC, detailing financial results up to September. The DRHP was approved by the SEBI earlier this month.
“Updated DRHP of LIC with December financials has been filed,” an official said, adding it was required to be done as per SEBI observations.
According to the updated financials, the Life Insurance Corporation made a net profit of Rs. 235 crores in the October-December quarter. From April to December 2021, the net profit climbed to Rs. 1,671.57 crore, up from Rs. 7.08 crore the previous year.
To fulfil the restricted disinvestment objective of Rs. 78,000 crores in the current fiscal, the government expects to raise about Rs. 60,000 crores by selling roughly 31.6 crores or 5% of the life insurance firm.
The IPO was supposed to go live in March, but the Russia-Ukraine situation has thrown the preparations off because financial markets are extremely volatile.
Without filing new papers with India’s Securities and Exchange Board, the government has until May 12 to launch the IPO.
The international actuarial firm Milliman Advisors estimated LIC’s embedded value, which quantifies the consolidated shareholders’ worth in an insurance company, to be over 5.4 lakh crore as of September 30, 2021.
Although the DRHP does not publish the LIC’s market value, it is estimated to be around three times the embedded value based on industry standards.
The LIC IPO would be the largest ever in the history of the Indian stock market, with a 5% share dilution. Its market valuation would be comparable to that of leading firms like RIL and TCS once it was listed.
The sum raised by Paytm’s IPO in 2021 was the greatest ever, at Rs. 18,300 crores, followed by Coal India (2010), which raised about Rs. 15,500 crore, and Reliance Power, which raised nearly Rs. 15,000 crores.
