Call for clarity: Investors reach govt door, seek LIC IPO details

Investors have approached the government to seek details about the Life Insurance Corporation of India’s (LIC’s) initial public offering (IPO), which is likely to be launched towards the end of this financial year. There has been a strong response from investors after the government had approached them to inform how the insurer is being restructured ahead of the IPO, along with its financials, an official said.
 
This has given confidence and assurance to the government to decide the issue size of the state-owned insurer’s IPO that is expected to be the largest in the country.
 
Investors have been keen to know the embedded value of India’s largest insurer, and the value of new businesses, which are yet to be determined, the official said.
 
“Investors also want more data and numbers before making an investment decision, but this data is not available with the government yet,” he added.
 
Even as the embedded value of LIC is yet to be determined, the IPO is expected to be worth around Rs 1 trillion. Although the Securities and Exchange Board of India (Sebi) has amended its rules to allow the IPO issue size to be 5 per cent if a company’s valuation is over Rs 1 trillion, the response from investors will give assurance to the government while finalising the offer size, the official said.

The exercise for calculation of embedded value is simultaneously being undertaken, but there are some technological challenges that the intermediaries are facing, he said. However, the process is on track, and the EV would be derived by September. The LIC IPO launch has been planned between January and March, which would not be impacted, he added.
 
Investors have also sought clarity from the government if it plans to do a pre-IPO placement. However, the government’s stand, as of now, is clear that there won’t be a pre-IPO placement, the official said. Pre-IPO placement is sale of a company's shares before its listing on exchanges.
 
The government is trying to address all queries of investors, so that they can make their investment decisions. This will help in smooth sailing of the IPO of LIC, touted to be India’s largest listing.