The government is seeking a valuation of around $109 billion for state-backed Life Insurance Corporation (LIC), in what's slated to be India's biggest initial public offering (IPO).
The government is mulling a 5-10% stake sale in the insurer, that could fetch it between Rs 40,000 crore and Rs 1 lakh crore.
The probable valuation is based on initial talks and may change following details talks, due diligence, and official valuation report, sources told Bloomberg.
The Modi government is pushing ahead with LIC's IPO in order to help it fix a widening budget lacuna as it targets a Rs 1.75 lakh crore disinvestment target. The LIC IPO is vital to the government accomplishing this goal.
The government may also let foreign direct investment (FDI) in the state-run insurer to ensure a diversified and high demand across investors.
Earlier this month, the government had appointed 10 merchant bankers comprising Goldman Sachs (India) Securities, Citigroup Global Markets India, and Nomura Financial Advisory and Securities India to manage LIC's mega IPO.
Other selected bankers include SBI Capital Market, JM Financial, Axis Capital, BofA Securities, JP Morgan India, ICICI Securities, and Kotak Mahindra Capital Co Ltd, a circular on the divestment department website said.
The Department of Investment and Public Asset Management (DIPAM) is also in the process of appointing a legal adviser for the stake sale and the last date for putting bids is September 16.
Actuarial firm Milliman Advisors LLP India has already been appointed to assess the embedded value of LIC ahead of the IPO, which is likely in the January-March quarter of 2022.
So far this financial year, Rs 8,368 crore has been mopped up through minority stake sales in PSU and the sale of SUUTI (Specified Undertaking of the Unit Trust of India) stake in Axis Bank.
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