LIC IPO: With stock markets still facing headwinds amid uncertainties around the Ukraine conflict, the Centre has decided to put on hold its LIC IPO decision for some time and wait for the financial market to stabilize. The LIC IPO will now happen only in the next financial year, chances are that the issue may hit the market by mid-May if market conditions are stable. However, any further delay could will require additional regulatory requirements, sources told News18.com.
Since Russia’s invasion, uncertainty has been surrounding the country’s biggest IPO. The government’s sale of about 31.6 crore shares or a 5 per cent stake in Life Insurance Corporation (LIC), which was estimated to fetch around Rs 60,000 crore to the exchequer, was originally planned to be launched in March.
The government has time till May 12 to launch the initial public offering without filing fresh papers with regulator Sebi, according to sources. The only additional requirement till then will be an addendum to the draft red herring prospectus on the insurer’s December quarter results, News18 has learned from sources.
LIC has reserved 50 per cent of the net offer (after excluding the portion reserved for policyholders and employees) for qualified institutional buyers or QIBs, 15 per cent for non-institutional bidders and 35 per cent for retail individual bidders in accordance with the Sebi regulations. Foreign institutional investors are part of the QIB portion.
Earlier, it was reported that the is planning to file final papers for the LIC’s Initial Public Offering (IPO) with market regulator the Securities and Exchange Board of India (Sebi). This will provide details about the price band, discount for policyholders and retail buyers, and the actual number of shares to be put on the block, an official said told PTI.
“We have got the approval of the DRHP and the next step would be to file the RHP, which will give details of the price band and the actual number of shares. We are watching the situation, and soon we will take a call on the timing of the share sale,” an official told the news agency.
LIC IPO: Embedded value
The DRHP disclosed the LIC’s embedded value at Rs 5,39,686 crore as of September 30, 2021. For life insurers, one of the most effective ways of calculation is through Embedded Value (EV) to arrive at their IPO value. The EV is the sum total of the present value of all future profits from existing business plus net worth, which includes capital.
LIC IPO: Results
LIC, announcing its Q3 results yesterday said its fiscal third-quarter profit after tax jumped to Rs 234.91 crores, from a mere Rs 0.91 crore in the same quarter in the previous year, primarily due to a change in funds redistribution policy. The company had booked a profit worth Rs 29,102 crore from the sale of investments in the first six months of the current financial year.
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