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LIC IPO to open on May 4; Sebi approves updated DRHP

The government is likely to file RHP for the LIC IPO by Wednesday.

FPJ Web Desk | Updated on: Monday, April 25, 2022, 11:53 PM IST

LIC IPO to open on May 4; Sebi approves updated DRHP | (Photo by SUJIT JAISWAL / AFP)
LIC IPO to open on May 4; Sebi approves updated DRHP | (Photo by SUJIT JAISWAL / AFP)
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The initial public offering (IPO) of Life Insurance Corporation of India (LIC) is likely to open on May 4, according to news reports citing sources privy to the development.

The government is likely to file the red herring prospectus for the LIC IPO by Wednesday.

The issue is expected to close on May 9. The anchor book for the LIC IPO is likely open on May 2, according to a report in CNBC-TV18.

Sources said that the Board is likely to meet on April 27 to decide on the appropriate size and price band, according to a report in The Economic Times.

The government, which wholly owns the insurance behemoth, plans to sell a 3.5 percent instead of 5 percent as mentioned in the previous Draft Red Herring Prospectus (DRHP), ANI said.

LIC has cut the size of IPO from 5 percent to 3.5 percent due to the market condition.

A proposal to reduce the size of LIC's IPO to 3.5 percent from 5 percent made in its draft red herring prospectus (DRHP) was tabled and approved at a board meeting held on Saturday.

The IPO, through which the government is likely to sell 3.5 percent stake in state-owned LIC, will fetch Rs 21,000 crore to the exchequer, PTI said.

The government has also filed papers with Securities and Exchange Board of India (Sebi) seeking exemption from the 5 percent stake sale norm, sources said.

As per the Sebi norms, companies with valuation over Rs 1 lakh crore have to sell 5 percent stake in IPO.

LIC's embedded value, which is a measure of the consolidated shareholders value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.

Based on investor feedback, the market value of government-owned LIC has been pegged at 1.1 times its embedded value or Rs 6 lakh crore.

The IPO values LIC at Rs 6 lakh crore.

LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal.

The government has pegged disinvestment receipts at Rs 65,000 crore in the current financial year, up from Rs 13,531 crore mopped up last fiscal.

Last month, market regulator SEBI approved the initial public offering proposal of the Life Insurance Corporation of India (LIC).

The company has filed the Draft Red Herring Prospectus with the market regulator Securities and Exchange Board of India (SEBI).

It has time until May 12 to launch the IPO. If it is not done by May 12, the company would be required to file fresh papers with the market regulator.

The government had initially wanted to list LIC in the last financial year that ended March 31 but had to delay the sale after the Russia-Ukraine war triggered a market rout.

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Published on: Monday, April 25, 2022, 10:11 PM IST