LIC IPO: Likely to file DRHP with Sebi today, says report

FPJ Web DeskUpdated: Friday, February 11, 2022, 10:27 AM IST
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The quantum of divestment and EV numbers will be mentioned in the DRHP/ Representative image |

Life Insurance Corporation of India's initial public offering (IPO) is expected to file its Draft Red Herring Prospectus (DRHP) on February 11, according to a report in Moneycontrol quoting CNBC-TV18.

Sources told the channel the Insurance Regulatory and Development Authority (IRDAI) had cleared the LIC proposal in a board meeting on February 9. The quantum of divestment and EV numbers will be mentioned in the DRHP, it said, Moneycontrol said.

The government is looking for a valuation of $203 billion for the life insurance giant, which will make it the second-largest listed company by market capitalisation, according to Bloomberg. India is considering selling about 5 percent of the shares it holds in LIC, according to people familiar with the matter, the report said.

The government will launch the mega public offer of LIC by March and file draft papers with market regulator Sebi by the end of January, an official said, according to PTI.

Finance Minister Nirmala Sitharaman had reviewed the progress of the initial public offering (IPO) of Life Insurance Corporation (LIC) in a meeting with top officials of the ministry, the report said.

The official said the September 2021 quarter financials of LIC are getting finalised as well as fund bifurcation is in progress.

“We are hopeful of filing the DRHP (draft red-herring prospectus) with Sebi by month-end or early-February. One thing is for sure that IPO will come before the end of the current fiscal,” the official told PTI.

LIC IPO crucial to meet disinvestment target

LIC IPO is crucial for meeting the Rs 1.75-lakh crore disinvestment target set for the current financial year ended March 2022. So far this fiscal, Rs 9,330 crore has been mopped up through PSU disinvestment.

The government in September last year appointed 10 merchant bankers, including Goldman Sachs (India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd to manage the mega initial public offering of country’s largest insurer LIC.

Other selected bankers include SBI Capital Market Ltd, JM Financial Ltd, Axis Capital Ltd, BofA Securities, JPMorgan India Pvt Ltd, ICICI Securities Ltd, and Kotak Mahindra Capital Co Ltd.

Cyril Amarchand Mangaldas has been appointed as legal advisor for the IPO.

The government is in the process of deciding the quantum of government stake that will be divested through the IPO, the report said.

The government is also mulling allowing foreign investors to pick up stakes in the country’s largest insurer LIC. According to Sebi rules, foreign portfolio investors (FPI) are permitted to buy shares in a public offer. However, since the LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with Sebi norms regarding foreign investor participation.

The Cabinet Committee on Economic Affairs had in July last year cleared disinvestment of LIC.

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