SEBI approves LIC draft papers; clears decks for mega IPO

Markets regulator Sebi has given approval to mega IPO proposal of Life Insurance Corporation LIC to help the government mobilise about Rs 63000 crore to meet the disinvestment target for the current fiscal year sources saidSebi has given its nod to draft red herring prospectus DRHP filed by LIC on February 13 2022 sources saidThe goahead from the Securities and Exchange Board of India Sebi has come in less than a month fastest ever to any companyGoing by the DRHP the initial public offering IPO would see sale of 316 crore shares or 5 per cent stake of the governmentAlso employees and policyholders of the insurance behemoth would get a discount over the floor priceLICs embedded value which is a measure of the consolidated shareholders value in an insurance company has been pegged at about Rs 54 lakh crore as of September 30 2021 by international actuarial firm Milliman AdvisorsAlthough the DRHP does not disclose the market valuation of LIC as per industry standards it would be about 3 times the embedded value or around Rs 16 lakh croreThe IPO is offer for sale OFS by Government of India and there will be no fresh issue of shares by LIC The government holds 100 per cent stake or over 63249 crore shares in LIC The face value of shares is Rs 10 apieceThe LIC IPO would be the biggest IPO in the history of Indian stock market and once listed LICs market valuation would be comparable to top companies like RIL and TCS So far the amount mobilised from IPO of Paytm in 2021 was the largest ever at Rs 18300 crore followed by Coal India 2010 at nearly Rs 15500 crore and Reliance Power 2008 at Rs 11700 croreAs per norms up to 5 per cent of the issue size can be reserved for employees and up to 10 per cent for policyholders The IPO of LIC is expected by March and the proceeds would be crucial to meet the revised disinvestment target of Rs 78000 crore for the current fiscal yearSo far the government has raised Rs 12030 crore through CPSE disinvestment and Air India strategic sale this fiscal yearLIC share capital was raised from Rs 100 crore to Rs 6325 crore during September last year to help facilitate the IPO Last month LIC reported a profit after tax of Rs 1437 crore for the first half of 202122 as compared with Rs 614 crore in the yearago periodIts new business premium growth rate stood at 5541 per cent in the first half of 202122 compared with 39476 per cent during the yearago periodThere are currently 24 life insurance companies in India with LIC being the sole public player The size of the Indian life insurance industry was Rs 62 lakh crore on a totalpremium basis in fiscal 2021 up from Rs 57 lakh crore in fiscal 2020This story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever