New Delhi:
The mega initial public offering (IPO) of the state owned Life Insurance Corporation (LIC) will now be pushed towards end of the current fiscal, said government sources.
Earlier, it was expected that the LIC IPO of to be launched durimng Diwali or third quarter of the current fiscal.
“The preparations are going on from both LIC and the government side. It will minimum take another five months for the LIC to hit the street with its mega IPO. As the government is determined to go ahead with its LIC disinvestment plans of LIC during the fiscal, they will do it but not before February or March ,’’ said government sources.
Though,the lagislative changes in the LIC Act 1956, to facilitate the LIC IPO, are already in place, the government appointed actuary Milliman is yet to finalise the embedded value of the corporation.
The embeded value of the corporation will be key to decide the size and pricing, that includes face value and premium,of the IPO.
While MR Kumar, chairman, who is scheduled to retire in this month end, is getting an extension soon, Raj Kumar, managing director, LIC has been made the point person from the LIC side to handle all its IPO related issues.
The Appointments Committee of Cabinet(ACC) has approved the extension of retirement age of LIC chairman from 60 to 62.
Meanwhile the government is planning to appoint investment bankers this month for the IPO, according to people familiar with the matter.
The government will send out invitations in the coming weeks for the share sale of the country’s biggest insurer, said the people, who asked not to be identified as the discussions are private.
Prime Minister Narendra Modi’s government is keen to go ahead with LIC’s IPO — potentially India’s biggest — to help plug a widening budget gap. The administration plans to raise $24 billion by selling assets including Air India Ltd. and Bharat Petroleum Corp. as it attempts to revive an economy battered by the coronavirus pandemic.
A listing could value LIC at as much as $261 billion, based on its assets under management and using private sector insurers as a benchmark, analysts at Jefferies India led by Prakhar Sharma wrote in a February note. That would make it bigger than Reliance Industries Ltd., which is currently India’s largest listed company with a market value of about $199 billion.
LIC had total assets of Rs 36 trillion ($439 billion) in the financial year 2020-2021, according to its latest annual report. The insurer had an almost 69% market share in life insurance in terms of total first year premiums.
Deliberations are ongoing and details of LIC’s listing plans could still change, the people said.