LIC may be valued around $109-bn for its mega IPO

The government is considering selling a 5%-10% stake in the company, which could raise between Rs 40,000 crore and Rs 1 trillion, according to people with knowledge of the matter, who asked not to be identified as the matter is private. The potential valuation is based on preliminary talks and may change after further discussions, due diligence and an official valuation report, the people said. A spokesperson for the finance ministry declined to comment.

 

New Delhi, Sept 15:

The government is seeking a valuation of between Rs 8 trillion ($109 billion) and Rs 10 trillion for state-backed Life Insurance Corp. in what’s slated to be the nation’s biggest initial public offering.

The government is considering selling a 5%-10% stake in the company, which could raise between Rs 40,000 crore and Rs 1 trillion, according to people with knowledge of the matter, who asked not to be identified as the matter is private.

The potential valuation is based on preliminary talks and may change after further discussions, due diligence and an official valuation report, the people said. A spokesperson for the finance ministry declined to comment. LIC didn’t immediately respond to an email seeking comment.

Earlier, the government had appointed Milliman Advisors LLP India as the reporting actuary for determining the Indian Embedded Value (IEV) for LIC

The IEV is a measure of the consolidated value of shareholders’ interest in the life insurance business within the meaning of the Insurance Act, 1938, and applicable IRDAI regulations. It is one of the pre-conditions of the initial public offer (IPO) for LIC, and it needs to be determined by an independent actuary.

Prime Minister Narendra Modi’s government is pushing ahead with LIC’s IPO to help plug a widening budget gap as it aims to raise Rs 1.75 trillion by March through divestments. The LIC sale is key to the government achieving this target. India may also allow foreign direct investment in the insurer to ensure diversified and strong demand across investors.

‘Mother of All IPOs’
The sale could be “the mother of all IPOs so far in India,” said Jyoti Roy, deputy vice president at Angel Broking. Although there will be appetite, the sale is likely to be at the end of the financial year, meaning it could “drain liquidity and impact the secondary market to some extent,” he said.

Bankers met government and LIC officials last week to formally kick off the sale process.

A listing is expected between January and March next year, Bloomberg has reported earlier.

The government selected 10 banks, including Kotak Mahindra Bank Ltd., Goldman Sachs Group Inc., JPMorgan Chase & Co. and ICICI Securities Ltd., to arrange the IPO. IFR reported the estimated valuation earlier Wednesday.

LIC  has seen its total assets growing robustly by 22 per cent in year on year(y-o-y) to Rs. 38,04,610 crore in FY 2020-21,

The corporation's total Life Fund(total investment) has gone up by 10 per cent y-o-y to the tune of Rs.34,36,686 rores in Fy 2020-21.

The total funds of the corporation, invested across the sectors of the economy, are Rs 36,76,170 crores as on 31st March 2021.

In 2020-21 LIC has settled 229.15 lakhs claims amounting to Rs. 1,47,754 crores.

With footprints in 14 countries, LIC is entering into 66th year of its existence on 1st September, 2021.

During fy 2020-21 the LIC has sold 2.10 crore new policies and registered a growth of 3.48 per cent in the new business in terms of the first year premium by collecting an amount of Rs 1.84 Lakh crore in FY 2020-21.


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