LIC IPO to open on May 4: sources

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 3.5% stake in the state-owned Life Insurance Corporation (LIC), will fetch ₹21,000 crore to the exchequer.

The IPO values LIC at ₹6 lakh crore.

The government had in February planned to sell 5% stake, or 31.6 crore shares, in the insurance behemoth and had filed draft papers with SEBI.

However, the IPO plans faced headwinds from the ongoing market volatility due to the Russia-Ukraine war.

Last week, the government decided to lower the issue size to 3.5%.

The government has also filed papers with SEBI seeking exemption from the 5% stake sale norm, sources said.

As the Securities and Exchange Board of India (SEBI) norms, companies with valuation over ₹ 1 lakh crore have to sell 5% stake in IPO.

LIC’s embedded value, which is a measure of the consolidated shareholders value in an insurance company, was pegged at about ₹5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.

Based on investor feedback, the market value of government-owned LIC has been pegged at 1.1 times its embedded value or ₹6 lakh crore.

LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal. The government has pegged disinvestment receipts at ₹65,000 crore in the current financial year, up from ₹13,531 crore mopped up last fiscal.

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