LIC IPO: Government. submits updated draft papers with Q3 financial data

The government has submitted updated draft papers to market regulator SEBI for an IPO for LIC, which include the insurance giant’s December quarter financial data, an official said on Monday.

Ahead of the Mega IPO on February 13, the government had submitted the draft Red Herring Prospectus (DRHP) to the regulator detailing financial results through September. The DRHP received SEBI approval earlier this month.

“LIC’s updated DRHP with December financials has been filed,” an official said, adding that it was required according to SEBI observations.

According to the updated financial data, Life Insurance Corporation reported a net profit of ₹235 crore in the October-December quarter. Net profit rose to £1,671.57m from April to December 2021, up from £7.08m a year ago.

The government expects to earn more than ₹60,000 crore from the sale of approximately ₹31.6 crore, or 5% stake, in the life insurance company to meet the reduced divestment target of ₹78,000 crore in the current fiscal year.

The IPO was originally planned for March, but the Russia-Ukraine crisis thwarted plans as stock markets are very volatile.

The government has until May 12 to launch the IPO without filing new papers with the Securities and Exchange Board of India.

The embedded value of LIC, which is a measure of an insurance company’s consolidated shareholder value, has been determined by international actuarial firm Milliman Advisors to be approximately 5.4 lakh crore as of September 30, 2021.

Although the DRHP does not disclose the market valuation of LIC, by industry standards it would be approximately three times the embedded value.

At a 5% share dilution, LIC’s IPO would be the largest in the history of the Indian stock market and once listed, its market valuation would be comparable to top companies such as RIL and TCS.

So far, the amount mobilized from Paytm’s IPO in 2021 was the largest ever at 18,300 crore, followed by Coal India (2010) at almost 15,500 crore and Reliance Power (2008) at 11,700 crore.

During the current fiscal year, ₹12,423.67 billion has been raised through sales offers, employee OFS, strategic divestments and buybacks. The target for the full financial year is ₹78,000 crore.

For the next financial year, the divestment target has been set at ₹65,000 crore.

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