LIC IPO: Finance Minister reviews progress of IPO amid third wave concerns

LIC IPO: The insurer is looking to file DRHP with Sebi this month, in sync with govt's plan to list the company this financial year

Finance Minister Nirmala Sitharaman reviewed progress made in launching the initial public offering of Life Insurance Corporation of India (LIC) as the ongoing third Covid-19 wave raises concerns over insurer’s listing, that’s touted to be India’s largest.

The review was done with officials of Department of Investment and Public Asset Management (DIPAM), Department of Financial Services (DFS), Insurance Regulatory and Development Authority of India (IRDAI), and LIC.

The insurer is looking to file the draft red herring prospectus (DRHP) with Securities and Exchange Board of India (Sebi) this month, in sync with the government’s plan to list the insurer in this financial year. The embedded value (EV) of LIC would also be disclosed in the DRHP. Government-appointed actuary Milliman Advisors has shared a draft EV with the government, and would soon be sharing the final embedded value of LIC.  

The finance ministry and LIC have recently approved gradual lowering of the the insurer’s distributable surplus to policyholders. From next year, LIC would distribute 92.5 per cent of its surplus to policyholders from 95 per cent at present, and will gradually bringing it down to the industry norm of 90 per cent. The pie for shareholders including the government will gradually go up to 10 per cent from 5 per cent at present.

The government will also reserve a part of the public offering for employees and policyholders of LIC. The Centre has reserved 10 per cent of the allotment in LIC’s initial public offering (IPO) for policyholders. The insurer has also started an advertisement campaign for policyholders to prod them to update their personal details with LIC, and open a demat account to participate in the listing to become shareholders of the country’s largest insurer.