Govt considers seeking Rs 50,000 cr in mega LIC IPO next month: Report

The government is discussing selling as much as a 7% stake in LIC through the listing, say people with knowledge of the matter

India is considering seeking around Rs 50,000 crore ($6.6 billion) next month from the initial public offering of state-owned Life Insurance Corp, people with knowledge of the matter said. 

The government is discussing selling as much as a 7% stake in LIC through the listing, according to the people, who asked not to be identified because the information is private. It aims to launch the share sale before current approvals for the offering expire on May 12, the people said. 

Centre is looking at a mid-May timeline for launching the mega initial public offering of its largest insurer with hopes that the market volatility triggered by Russia’s invasion of Ukraine will subside, Bloomberg News reported last month citing people familiar with the matter. The listing forms a key part of plans by Prime Minister Narendra Modi’s administration to divest state assets to fund a yawning budget deficit. 

Life Insurance Corp.’s published embedded value will be valid for the IPO until May as per rules. A delay beyond that would mean LIC would have to re-calculate the embedded value, a key valuation gauge for insurance firms, based on the latest financials.

With market swings triggered by the war, what could be the country’s biggest IPO was delayed into FY23, Bloomberg News reported earlier this month.

The government and its advisers are considering seeking a valuation of about 1.25 to 1.5 times LIC’s embedded value, the people said. Officials are still discussing potential terms of the offering, and the fund-raising target could still change, the people said. 

A representative for LIC declined to comment, while calls and an email to the finance ministry spokesperson remained unanswered.

Plans for the IPO were first announced by Finance Minister Nirmala Sitharaman in February 2020, but was deferred due to the pandemic.