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SEBI has approved the Draft Documents (DRHP) filed by LIC on February 13, 2022. Got this approval in less than a month
Photo Credit : Reuters
The Securities and Exchange Board of India (SEBI) has approved the proposal for IPO of Life Insurance Corporation (LIC). This will help the government to raise Rs 63,000 crore to meet its disinvestment target for the current financial year.
PTI news agency has informed that SEBI has approved the Draft Documents (DRHP) filed by LIC on February 13, 2022. This approval has been received in less than a month.
According to the DRHP, under the IPO, the government will sell 316 million equity shares of LIC or its five percent stake in the company. The policyholders and employees of the company will get a discount on the minimum share price in the IPO.
The underlying value of LIC has been worked out by Milliman Advisors, an international valuation company. The underlying value of the company as on September 30, 2021 was Rs 5.4 lakh crore. The underlying value is arrived at on the basis of the integrated value of the shareholders in the insurance company.
Although the market valuation of LIC in DRHP has not been disclosed, however, as per industry standards, it would be around three times the underlying value or Rs 16 lakh crore. The government has 100 per cent stake or more than 632.49 crore shares in LIC.
The face value of these shares is Rs 10 per share. LIC's public issue will be the largest IPO in the history of the Indian stock market. Once listed, the market valuation of LIC will be around that of top companies like Reliance Industries and Tata Consultancy Services (TCS).
Some time ago, experts were of the opinion that there is volatility in the market in the midst of Russia-Ukraine war, due to which negative reaction is coming out in the markets. Experts believe that the current market volatility is not conducive for LIC's IPO and the government may postpone the issue to the next financial year.