LIC: Govt weighing 5% stake sale via mega IPO, says report

The government plans to offer 316 million shares of the 6.32 billion shares it owns in Life Insurance Corp of India, and no fresh stock will be issued, say sources

India is considering selling about 5% of the shares it holds in a state insurer as it prepares to file documents for the country’s biggest initial public offering, according to people familiar with the matter.

The government plans to offer 316 million shares of the 6.32 billion shares it owns in Life Insurance Corp. of India, and no fresh stock will be issued, the people said, asking not to be identified discussing confidential information. The draft prospectus is expected to be filed this week, they said.

Deliberations are still ongoing and details could change, the people said. The embedded value of the company is estimated to be about Rs 5.4 trillion ($72 billion), they said. The share price will be determined through a book-building process, one of the people said, while another person said the insurer’s board is likely to meet Friday to ratify the decision.

Representatives for the company, known as LIC, didn’t immediately respond to requests for comment. A finance ministry spokesman in New Delhi was unavailable for comment.

The first-time share sale by the insurer is part of Prime Minister Narendra Modi’s efforts to mop up cash and help rein in a budget deficit that’s widened in the midst of the pandemic. For almost two years, his administration has been preparing the IPO plan for LIC, which has almost $500 billion in assets.

A sharp reduction in the government’s asset-sale target for the financial year ending March 31 has sparked speculation that the state will be seeking less from the LIC IPO that was anticipated earlier. It had planned to raise about $5 billion to $13 billion, people familiar with the matter said earlier.

The operator of digital payments app Paytm currently holds the record for the nation’s biggest IPO after raising $2.5 billion in a November listing.