Life Insurance Corporation (LIC), a public sector insurance behemoth, submitted a draught red herring prospectus (DRHP) with market regulator SEBI on Sunday, paving the way for a massive initial public offering (IPO). By the end of March, LIC will be listed on stock exchanges.
“The DRHP of LIC IPO has been filed today with the SEBI,” announced the Department of Investment and Public Asset Management (DIPAM) Secretary on Twitter.
He stated that the proposed IPO is a 100 percent OFS (offer for sale) by the Government of India, rather than a new issue of LIC shares. According to the draught prospectus, LIC would sell 316.25 million Rs 10 face value shares, representing a 5% equity holding. While anchor investors would receive a portion of the shares, qualifying LIC policyholders will receive up to 10% of the offer amount. As of March 31, DIPAM reported that LIC had a 66% market share in New Business Premiums, with 283 million policies and 1.35 million agents.
“Embedded value of LIC as on 30th Sep 21 is Rs 5,39,686 Cr (about INR 5.4 trillion),” DIPAM Secretary tweeted.
The draught prospectus said that the measure is aimed at obtaining the benefits of listing on stock exchanges and carrying out the government’s Offer for Sale (OFS) of up to 316,249,885 equity shares. As of September 2021, LIC’s asset under management (AUM) was Rs 39.6 lakh crore, according to the DRHP. The LIC IPO is expected to assist the government in meeting its disinvestment objective, which has been reduced from Rs 1.75 lakh crore to Rs 78,000 crore for the financial year 2021-22. It is also likely to give the government’s disinvestment agenda a huge boost. The government’s decision to privatise Air India has already sent a strong message to investors about the government’s desire to accelerate reforms.
