The gigantic public offering from Life Insurance Corporation India (LIC) is likely to open for anchor investors on March 11, according to a media report.
Sources close to LIC said it is premature to comment at this stage since the initial public offering (IPO) is awaiting clearance from the Securities and Exchange Board of India (Sebi).
The buzz in the markets is about the public float in the second week of March. A Reuters report said the IPO will open for anchor investors on March 11 and for other investors a couple of days later.
The issue is expected to get regulatory approval by the first week of March following which the Centre will set the price band. LIC on Sunday filed the draft red herring prospectus (DRHP) with Sebi.
The Centre will offload 5 per cent of the insurer’s equity through an offer for sale of 31.6 crore shares, with the IPO size anywhere between Rs 60,000 crore and Rs 70,000 crore — the biggest in the country.
Actuarial firm Milliman Advisors LLP India had worked out the embedded value (EV) of LIC, a key metric that is used to determine the valuation of insurance companies. EV is the present value of future profits and the insurer’s net worth. LIC’s EV as on September 30, 2021 stood at Rs 5.4 lakh crore.
Reports say the government could put the market value of LIC at four times embedded value, which would see its market capitalisation coming at around Rs 22 lakh crore. LIC will become the most valuable company, overtaking Reliance Industries, which has a market cap of Rs 16.39 lakh crore based on its closing price on the BSE on Friday.
Market appetite
There are concerns whether the market has the appetite for such a big IPO given the recent volatility in stocks. Analysts said much would depend on the valuation put by the government.
LIC had an asset under management (AUM) of Rs 39.74 lakh crore as of September 30, 2021, which was more than three times total AUM of all private life insurers and around 16.2 times AUM of the second-largest player and 1.1 times the entire Indian mutual fund industry.