State-owned insurance behemoth Life Insurance Corporation of India (LIC) on Tuesday has received capital markets regulator Sebi's go-ahead to raise funds through an initial share sale, CNBC-TV18 reported in an exclusive.
The IPO of the insurance major is likely to be launched before March-end, in this current financial year.
There were reports saying that the IPO may be shifted to the next fiscal due to the volatility in the markets amid the Russia-Ukraine crisis and its consequent impacts like surge in crude oil, inflation, rise in interest rates, etc. However, the Sebi nod suggests that the government is likely to launch the IPO in the current financial year.
As per the papers filed with Sebi, the issue is a 100 percent offer for sale for around 31.6 crore shares or a 5 percent stake of the firm. No fresh shares will be issued for the IPO. The government holds a 100 percent stake or over 632.49 crore shares in LIC. The face value of shares is ₹10 apiece.
The IPO is expected to help the government of India meet its revised disinvestment target of ₹78,000 crore FY22. The DHRP, however, does not indicate the offer size of the IPO.
LIC is one of the largest corporations in India, so its IPO launch would be the largest public offering ever in the history of the Indian financial markets.
The DRHP added that the embedded value (a metric used for life insurance firms that represent the sum of the present value of all future profits from the existing business and shareholders’ net worth) stands at around ₹5.39 lakh crore as on September 30, 2021.
Life Insurance Corporation of India is a statutory insurance and investment corporation, incorporated in 1956 and headquartered in Mumbai. It is a government-owned company in India. Since the incorporation, LIC has been selling and soliciting life insurance and is the largest life insurer in India.
It has a market share of 66.2 percent in New Business Premium, 74.6 percent in the number of individual policies issued and 81.1 percent in the number of the group policies issued. The AUM of LIC also increased from ₹16.8 lakh crore in FY20 to ₹36.7 lakh crore in FY21 on a standalone basis.
The company’s net premium income has increased at a CAGR of 9.30 percent from 2019-2021. The profit after tax increased at a CAGR of 3.87 percent in the same period.
