LIC IPO: Govt to take call on its timing this week
The central government has time till May 12 to launch the LIC IPO if it does not want to file fresh papers with SEBI.
- Apr 21, 2022,
- Updated Apr 21, 2022 2:34 PM IST
The central government is likely to take a call on the timing of the mega Life Insurance Corporation of India (LIC) initial public offering (IPO) this week, news agency PTI reported citing a senior official.
''A decision on timing the IPO would be taken this week,'' the official told PTI.
India's largest IPO till date, which would have seen the sale of a 5 per cent stake or 31.6 crore shares of LIC, was initially planned for March. However, due to prevailing geopolitical tensions such as Russia's invasion of Ukraine, the IPO was pushed back.
Centre has time till May 12 to launch the LIC IPO if it does not want to file fresh papers with market regulator SEBI. If the IPO is not launched before then, it would have to be deferred till August or September since fresh papers with updated quarterly results and valuations would have to be filed.
The senior official explained that it would be a tough call for the government to decide whether to go ahead with the retail and domestic investor demand or to wait for geopolitical tension to ease and FIIs to return to the market, reported PTI.
LIC's embedded value was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors. Embedded value is a measure of the consolidated shareholders' value in an insurance company.
There were estimates made in certain quarters that the firm's market valuation would be about 2-3 fold its embedded value. However, the official said that for a company of the magnitude of LIC, such high multiplier to embedded value may not be correct.
The official added that the IPO price would have to be fixed in a certain way that on listing day there is an upside to the stock and investors get rewarded.
"LIC is already a matured company and has seen business growth since its inception. The market valuation would have to be done keeping in mind its growth potential here-on," the official added.
They further added that under the present market condition the government is unlikely to offload more than 5 per cent stake in LIC. "When we are already facing headwinds, we cannot test waters with higher IPO size," they said.
(With agency inputs)
Also read: LIC IPO: Five things to know before issue hits Dalal Street
Also read: LIC IPO: Decision on timing of public offer shortly
The central government is likely to take a call on the timing of the mega Life Insurance Corporation of India (LIC) initial public offering (IPO) this week, news agency PTI reported citing a senior official.
''A decision on timing the IPO would be taken this week,'' the official told PTI.
India's largest IPO till date, which would have seen the sale of a 5 per cent stake or 31.6 crore shares of LIC, was initially planned for March. However, due to prevailing geopolitical tensions such as Russia's invasion of Ukraine, the IPO was pushed back.
Centre has time till May 12 to launch the LIC IPO if it does not want to file fresh papers with market regulator SEBI. If the IPO is not launched before then, it would have to be deferred till August or September since fresh papers with updated quarterly results and valuations would have to be filed.
The senior official explained that it would be a tough call for the government to decide whether to go ahead with the retail and domestic investor demand or to wait for geopolitical tension to ease and FIIs to return to the market, reported PTI.
LIC's embedded value was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors. Embedded value is a measure of the consolidated shareholders' value in an insurance company.
There were estimates made in certain quarters that the firm's market valuation would be about 2-3 fold its embedded value. However, the official said that for a company of the magnitude of LIC, such high multiplier to embedded value may not be correct.
The official added that the IPO price would have to be fixed in a certain way that on listing day there is an upside to the stock and investors get rewarded.
"LIC is already a matured company and has seen business growth since its inception. The market valuation would have to be done keeping in mind its growth potential here-on," the official added.
They further added that under the present market condition the government is unlikely to offload more than 5 per cent stake in LIC. "When we are already facing headwinds, we cannot test waters with higher IPO size," they said.
(With agency inputs)
Also read: LIC IPO: Five things to know before issue hits Dalal Street
Also read: LIC IPO: Decision on timing of public offer shortly