Government-owned Life Insurance Corporation of India (LIC) is likely to file its draft papers with market regulator SEBI for its mega initial public offering (IPO) tomorrow (February 10), sources told Business Today TV on Wednesday.
The issue, after approval of SEBI, is likely to hit the market in March and up to 10 per cent of the issue size would be reserved for policyholders.
Earlier, during BT Budget RoundTable, DIPAM Secretary Tuhin Kanta Pandey had said that the embedded value of LIC will be upwards of Rs 5 lakh crore.
The embedded value will help establish the market valuation of LIC and determine how much money the government raises in the flotation. That will be crucial for the government to help meet its divestment targets and keep its fiscal deficit in check.
LIC's listing is crucial for the government to meet its lowered revenue estimates of divestment of Rs 78,000 crore for the current fiscal.
The government has so far raised about Rs 12,000 crore from privatisation of Air India and stake sale in other PSUs.
Actuarial firm Milliman Advisors LLP India has worked out the embedded value of LIC, while Deloitte and SBI Caps have been appointed as pre-IPO transaction advisors. Under the embedded value method, insurance companies' present value of future profit is also included in their present net asset value (NAV).
The government has 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 IPO of the country's largest insurer.
Separately, the Department for Promotion of Industry and Internal Trade (DPIIT) is making changes in the FDI policy to facilitate disinvestment of LIC, after taking views from the finance ministry.
Finance Minister Nirmala Sitharaman in her 2022-23 Budget speech had said: ''The public issue of the LIC is expected shortly.'' Pandey said the embedded value of Life Insurance Corporation (LIC) has been arrived at and it has to now get clearance from insurance regulator IRDAI.
The Cabinet Committee on Economic Affairs had in July last year cleared the proposal for LIC's IPO.
(With inputs from Karishma Asoodani)
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