LIC IPO: Government files updated DRHP with results

The government has filed updated draft papers with the Securities Exchange Board of India (SEBI) for an initial public offering (IPO) of LIC, including the December quarter results of the insurance giant, PTI reported citing officials on Monday.

On February 13, the government had filed a draft red herring prospectus (DRHP) with the market regulator SEBI providing details of LIC’s financial results till September. SEBI approved the DRHP earlier this month.

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“Updated DRHP of LIC with December financials has been filed,” an official said, adding that it was mandatory.

According to the latest financials, the insurance giant reported a net profit of Rs 235 crore in the October-December quarter. The net profit in April-December 2021 rose to Rs 1671.57 crore from Rs 7.08 crore in the year-ago period.

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The government is looking to raise over Rs 60,000 crore by selling around 31.6 crore shares or a 5% stake in the LIC to meet the revised disinvestment target of Rs 78,000 crore in the current financial year.

The LIC IPO was expected to be launched in March 2022, but the Russia-Ukraine crisis has derailed the plan as stock markets are highly volatile worldwide.

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The government can launch the IPO till May 12 without filing fresh papers with Sebi.

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

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The DRHP does not disclose LIC’s market valuation but according to industry standards, it would be about three times the embedded value.

With a 5% stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market. After listing, its market valuation would be comparable to top firms like Reliance Industries (RIL) and Tata Consultancy Services (TCS).

Paytm’s IPO in 2021 was the largest ever raising Rs 18,300 crore, followed by Coal India (2010) at around Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

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In the current fiscal year so far, the government has raised Rs 12,423.67 crore through offer for sale (OFS), employee OFS, strategic disinvestment and buyback. The target for the full fiscal year is Rs 78,000 crore.

The Centre has set a revised disinvestment target of Rs 65,000 crore for the next fiscal year.