LIC IPO has time window till May 12
Centre originally planned to go for LIC IPO in March, but the Russia-Ukraine crisis derailed the plans as stock markets are highly volatile
New Delhi: The central government has time till May 12 to launch the initial public offering (IPO) of LIC without filing fresh papers with market regulator Sebi, an official said.
The government's sale of about 31.6 crore shares or five per cent stake in Life Insurance Corporation (LIC), which was estimated to fetch around Rs60,000 crore to the exchequer, was originally planned to be launched in March, but the Russia-Ukraine crisis has derailed the plans as stock markets are highly volatile.
On February 13, the government filed the draft red herring prospectus (DRHP) for the IPO with Sebi, which granted its approval for the same last week. "We have a window till May 12 to launch the IPO based on the papers filed with Sebi. We are watching the volatility and will file the RHP giving the price band soon," an official said.
The DRHP filed with Sebi had details of the financial results of LIC and also the embedded value till September 2021. If the government misses the May 12 window available with it, LIC would have to file fresh papers with Sebi giving the results of December quarter and also update the embedded value.
LIC's embedded value, which is a measure of the consolidated shareholders value in an insurance company, was pegged at about Rs5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.
Although the DRHP does not disclose the market valuation of LIC, as per industry standards it would about 3 times the embedded value. The official further said that although the market volatility has reduced in the last fortnight , it would wait for the market to stabilise further so that retail investors get confidence to invest in the stock. LIC has reserved up to 35 per cent of its total IPO size for retail investors.
"The portion reserved for retail investors require about Rs20,000 crore to come in from retail buyers. Based on our market assessment, currently the retail demand is not as much to bid for the entire quota of shares," the official said.
