The Indian government has planned to sell a 5% stake in the initial public offering of the state-run Life Insurance Corporation of India (LIC), in what’s set to be the country’s largest sale.

The LIC, India’s biggest state-owned insurer, said the net
IPO (initial public offering) offer will constitute 4.99 per cent of the
company’s post-offer paid-up share capital. In its prospectus filed with market
regulator SEBI, LIC made this statement.

The
IPO issue is expected to be the country’s largest public issue and will hit the
capital market in March. As per the draft prospectus filed on February 13, LIC
will offload 316.25 million shares (over 31 crore). As per DRHP, LIC has said
as of September 2021, its assets under management (AUM) stood at Rs 39.6 lakh
crore.

Department
of Investment and Public Asset Management (DIPAM) in its release said that the
IPO is 100 per cent OFS by the government of India, and that no fresh issue of
shares will be made by LIC. “For filing valuation about 31.6 crore shares are
on offer representing 5% equity,” said secretary Thin Kanta Pandey.

The
insurance giant has a whopping 66 per cent market share in new business
premiums, with 283 million policies and 1.35 million agents as of 31st March
21. The embedded value of LIC as of September 30, 2021, stood at ₹5,39,686 cr
(about ₹5.4 lakh crore), the DIPAM Secretary said.

The
government plans to come out with the IPO, and the subsequent listing of Life Insurance
Corporation (LIC) on bourses by March. A portion of the IPO will be reserved
for anchor investors.

Also,
up to 10 per cent of the LIC IPO issue size would be reserved for
policyholders. Actuarial firm Milliman Advisors LLP India had worked out the
embedded value of LIC, while Deloitte and SBI Caps have been appointed as
pre-IPO transaction advisors.