The Government will be selling 5% of its equity in the Life Insurance Corporation of India (LIC). That is roughly 316 million shares valued at around Rs.65,000 crore. The sale will scale beyond the record set by Paytm last November, which raised Rs.18,000 with its public offering.
Finance Minister Nirmala Sitharaman, in her budget speech on Feb 1, 2019, had announced the Government’s plan to sell a stake in the LIC and complete the public listing before the end of this fiscal year (Mar 31 this year).
The Life Insurance Corp of India and the Department of Investment and Public Asset Management (DIPAM) have been working on the stake sale for the last two years. They filed the Draft Red Herring Prospectus (DRHP) with the markets regulator Sebi on Sunday.
Earlier LIC had announced that it would keep aside a portion of the Initial Public Offering for its policyholders. However, it is yet to finalize the numbers. Setting aside a part of the public issue for policyholders in the IPO will give them a better chance of allotment. Also, minimize conflict of interest between Policyholders and Shareholders.
After listing, The Life Insurance Corp of India will become one of the most valued companies in India, with a market valuation of around Rs.15 lakh crore. It will put the per-share price at Rs.2370. Further, compared to all the other public-listed Government-owned companies, LIC will stand taller in value.
Another significant factor is the Insurance Corp’s Embedded Value (EV) has jumped five times higher from Rs.95,605 crores last March to Rs.5.4 lakh crores by September.
As per reports, LIC aims to fetch one crore new Depository Participant (DP) accounts before the Initial Public Offering. Notably, the insurer opened a record 34 lakh DP accounts in January, with brokers trying to get their policyholders on board before the Public Issue.