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The Central Government is expected to file draft papers for the mega initial public offering of Life Insurance Company (LIC) with market regulator Sebi by next week, while a portion of the issue would be reserved for anchor investors, according to a PTI report.
Tuhin Kanta Pandey, Secretary to the Department of Investment and Public Asset Management (DIPAM), told PTI that an approval of the insurance regulator is awaited, post which the draft prospectus, detailing the size of the share sale, will be filed.
The issue, after approval of Sebi, is likely to hit the market in March, Pandey said.
In the current fiscal, the big-ticket initial public offering of LIC is in the works, besides the strategic sale of BPCL, Shipping Corp, Container Corp, RINL and Pawan Hans.
Briefing reporters after the Budget 2022-23, Sitharaman said, "LIC in all probability is going through this year. I have indicated clearly that it will happen."
"The public issue of the LIC is expected shortly. Others too are in the process for 2022-23," Sitharaman said.
The final valuation of LIC is still being worked out.
Why LIC's listing is crucial for govt
LIC's listing is crucial for the government to meet the lowered revenue estimates of ₹78,000 crore for the current financial year.
Till now, the Centre has raised around ₹12,000 crore from privatisation of Air India and stake sale in other PSUs.
The finance minister in her Budget speech had said: "The public issue of the LIC is expected shortly."
Pandey said the embedded value of LIC has been arrived at and it has to now get clearance from insurance regulator IRDAI.
"Within 7-10 days, the DRHP (Draft Red Herring Prospectus) for LIC IPO will be filed. Informally, we have been consulting Sebi on various issues. The size of the issue would be mentioned in the DRHP," he said.
The government aims to come out with the initial public offer (IPO) and subsequently list LIC on the bourses by March, he said.
"A portion of the IPO would be reserved for anchor investors like we have done in case of IPOs of IRFC and RailTel," Pandey added.
Up to 10% of the LIC IPO issue size would be reserved for policyholders.
Actuarial firm Milliman Advisors LLP India has worked out the embedded value of LIC, while Deloitte and SBI Caps have been appointed as pre-IPO transaction advisors. Under the embedded value method, insurance companies' present value of future profit is also included in their present net asset value (NAV).
The government has appointed 10 merchant bankers, including Goldman Sachs (India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd, to manage the mega IPO of the country's largest insurer.
The government is also mulling allowing foreign investors to pick up stake in LIC. As per Sebi rules, foreign portfolio investors (FPI) are permitted to buy shares in a public offer.
FDI policy would have to be tweaked for FII/FPI investment in this IPO, as LIC is a corporation and not an insurance company.
The Cabinet Committee on Economic Affairs had in July last year cleared the proposal for LIC's IPO.
With agency inputs
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