July 5, 2022

Y M L P-298

It Must Be Business

Updated DRHP gets SEBI’s nod; country’s largest insurer public offer to open on May 4

2 min read
Updated DRHP gets SEBI's nod; country's largest insurer public offer to open on May 4

In a big stamp to Zee Business news, the updated DRHP of Life Insurance Corporation of India (LIC) has been approved by capital market regulator Securities Exchange Board of India (SEBI). Zee Business has earlier said on Monday that revised DRHP of LIC IPO will get SEBI’s nod on April 25.  

As per the new DRHP, the government will sell 3.5 per cent stake in state-owned Life Insurance Corporation. The stake sale is expected to fetch Rs 21,000 crore to the exchequer. 

The initial public offering of the country’s largest insurer will open on May 4 and close on May 9, Zee Business Correspondent Aurag Shah claiming sources, adding that details such as LIC IPO price band, issue size, lot size etc will be known today via fresh filing through detailed RHP.  

Based on investor feedback, the market value of government-owned LIC has been pegged at 1.1 times its embedded value or Rs 6 lakh crore. 

The government had in February planned to sell 5 per cent stake or 31.6 crore shares in the insurance behemoth and had filed draft papers with Sebi. 

However, the IPO plans faced headwinds from the ongoing market volatility due to the Russia-Ukraine war. 

Last week, the government decided to lower the issue size to 3.5 per cent. 

The government has also filed papers with Sebi seeking exemption from the 5 per cent stake sale norm, sources said. 

As the Securities and Exchange Board of India (Sebi) norms, companies with valuation over Rs 1 lakh crore have to sell 5 per cent stake in IPO. 

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

LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal. The government has pegged disinvestment receipts at Rs 65,00.

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