LIC prospectus filing expected in Budget week

The Life Insurance Corporation of India (LIC) is expected to file the draft red herring prospectus (DRHP) for its mega initial public offer in the week of the general Budget beginning the first day of February.

A Finance Ministry official has confirmed that the DRHP preparation is underway and would be complete by the month-end, post which the document will be filed with the Securities and Exchange Board of India (SEBI). This would put the issue on track for closure before the end of the current fiscal year on March 31.

The LIC public issue is expected to be the largest ever by any Indian company and would dwarf the likes of Paytm and Coal India by a very wide margin. The government is expected to offload up to 10 per cent of its stake with the partial disinvestment and listing of the insurance giant.

The embedded value of LIC, India’s largest insurance company, will be crucial in merchant bankers and the government arriving at a market value for the firm. The official said the value is currently being evaluated and a final report is awaited.

The official also said the LIC issue is already attracting high interest from global investors, adding that there will be no shortfall in the disinvestment target for the current fiscal.

As many as 10 book running lead managers have been engaged by the government for the LIC share sale. These include the likes of Kotak Mahindra Capital, Goldman Sachs, JP Morgan, ICICI Securities, JM Financial, Citigroup Global, Nomura Financial, Axis Capital, DSP Merrill Lynch and SBI Capital.

A panel of cabinet ministers will have to approve the float, including the size and valuation of the sale.

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