The initial public offering (IPO) of the country’s largest insurer, LIC, will open on May 4 and close on May 9, sources said.
The IPO, through which the government will sell a 3.5% stake in state-owned Life Insurance Corporation (LIC), will raise 21,000 crore for the treasury.
The IPO values LIC at ₹6 lakh crore.
The government had planned in February to sell a 5% stake, or 31.6 billion shares, in the insurance giant and submitted draft papers to SEBI.
However, the IPO plans have faced headwinds from continued market volatility due to the Russia-Ukraine war.
Last week the government decided to reduce the issuance volume to 3.5%.
The government has also filed papers with SEBI to request an exemption from the 5% share sale norm, sources said.
Under Securities and Exchange Board of India (SEBI) norms, companies with a valuation above ₹1 lakh crore are required to sell 5% of the shares in an IPO.
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.
Based on investor feedback, the market value of government-owned LIC has been set at 1.1 times its embedded value, or ₹6 lakh crore.
The IPO of LIC would contribute a large part to the budgeted divestment proceeds in the current fiscal year. The government has set divestment proceeds at 65,000 crore in the current fiscal year, up from 13,531 crore last fiscal year.
