The much-awaited initial public offering (IPO) of Life Insurance Corporation of India is expected to be rolled out soon as the Insurance Regulatory and Development Authority (IRDAI) has approved the insurer’s mega proposal. The insurance regulator has reportedly given its nod to the offer, but a formal communication is yet to be released.
The state-owned insurance behemoth is likely to file its draft red herring prospectus(DRHP) today following the conclusion of its board meeting. The board of LIC of India is meeting to consider and approve the details of the proposed listing and eventually file a draft document with the market regulator Securities and Exchange Board of India (SEBI).
In an interaction with Fortune India, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey says that LIC will file its DRHP with SEBI on Thursday or Friday.
The DRHP, also known as the offer document, is prepared by merchant bankers as a preliminary registration document for companies looking to float an IPO for book building issues. The document contains all specific information related to the offering such as issue size, offer price, market valuation and quantum of disinvestment by the government.
The IPO, which is touted to be the country’s biggest-ever public offering, will see the government diluting up to a 10% stake in LIC to raise around ₹80,000 crore from the issue. Though, the market valuation of the insurer is yet to be formally announced.
Finance minister Nirmala Sitharaman in her Union Budget 2022 speech announced that the IPO of LIC is “expected shortly”.
The public issue may help government to meet its revised divestment target for the current fiscal. So far, the central government has managed to raise ₹9,330 crore through disinvestments in state-owned companies against the initial disinvestment target of ₹1.75 lakh crore for the financial year 2021-22. In the Union Budget 2022, the government revised downward the disinvestment target for the current fiscal to ₹78,000 core (including LIC IPO), and for FY23, it has been estimated at ₹65,000 crore.
Disinvestment secretary Tuhin Kanta Pandey had recently reiterated that plan is on course for the IPO in the last quarter of this fiscal. The LIC disinvestment proposal had already been approved by Cabinet Committee on Economic Affairs (CCEA) in July last year.
In September last year, as many as 10 merchant bankers, including Goldman Sachs (India) Securities, Citigroup Global Markets, and Nomura Financial Advisory and Securities (India), were hired to manage the mega IPO of LIC. Among others, SBI Capital Market, JM Financial, Axis Capital, BofA Securities, JPMorgan India, ICICI Securities, and Kotak Mahindra Capital were also appointed as bankers to manage the offer. Cyril Amarchand Mangaldas has been hired as legal advisor for the IPO.
