As the ongoing financial year is coming to an end on March 31, the question over the launch date of LIC’s initial public offering (IPO) is yet to be answered. The mega initial share sale of the country’s largest insurer was originally planned to be launched by the end of this fiscal year, but the Russia-Ukraine war derailed the plans as share markets went into highly volatile mode.
Now that both share market indexes sensex and nifty have started to make gains, investors are waiting for an announcement regarding the launch of LIC’s IPO. However, it is up to the government to decide the right time for the launch of LIC IPO given the fact that it would be the biggest ever initial share sale in the history of the Indian stock market.
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LIC IPO IN APRIL?
The government may go for the listing of LIC’s IPO by mid-April, according to a Reuters report.
“Most likely, LIC will now be listed by mid-April. We are closely watching the market conditions,” Reuters had reported earlier in March quoting a government official.
Meanwhile, deferring the LIC listing to the next financial year, which starts on April 1, also helps the government to meet its targeted fiscal deficit of 6.4 per cent of GDP in the coming fiscal year as proceeds from the IPO boost its revenue, Reuters reported.
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TIME TILL MAY 12
- The government has time till May 12 this year to launch the LIC’s IPO, according to the draft papers or Draft Red Herring Prospectus (DRHP)
- If the government postpones the launch date of LIC’s IPO beyond May 12, then fresh draft papers will have to be submitted.
- The draft papers were filed with the Securities and Exchange Board of India (Sebi) on February 13. The DRHP has been cleared by Sebi.
- Last week, the government filed updated draft papers with market regulator Sebi for the initial public offer of LIC, incorporating December quarter financials of the insurance behemoth.
LIC IPO SIZE
- The government is expecting to garner over Rs 60,000 crore by selling about 31.6 crore or 5 per cent stake in the life insurance firm to meet the curtailed disinvestment target of Rs 78,000 crore in the current fiscal.
- 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 Read More:-Google Pay, Pine Labs tie up to launch Tap to Pay feature for UPI
- Although the DRHP does not disclose the market valuation of LIC, as per industry standards it would be about 3 times the embedded value.
- At a 5 per cent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market and once listed its market valuation would be comparable to top companies like Reliance Industries Limited (RIL) and Tata Consultancy Services (TCS).
So far, the amount mobilised from the IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
