LIC IPO: Govt rubbishes reports of delay, says, LIC on track for IPO in Jan-Mar

Media speculation doubting the feasibility of LIC IPO this fiscal year is not correct. It is reiterated that plan is on course for the IPO in the last quarter of this fiscal, said DIPAM Secy Tuhin Kanta Pandey

LIC IPO
The plan is on course for LIC IPO in the last quarter of this fiscal: DIPAN Secy (File Photo PTI)

The government on Monday denied media reports of delay in proposed LIC IPO, saying that the proposed public issue is on course to open in quarter ending March 2022. “Some media speculation doubting the feasibility of LIC IPO this fiscal year is not correct. It is reiterated that plan is on course for the IPO in the last quarter of this fiscal,” Tuhin Kanta Pandey, Secretary of Department of Investment and Public Asset Management tweeted. Once listed, LIC (Life Insurance Corp) is likely to become one of the biggest domestic companies by market capitalisation with an estimated valuation of Rs 8-10 lakh crore.

The assertion comes after some media reports claimed that the government is unlikely to come up with the IPO of LIC in the current financial year ending March 2022, as the valuation of the state-owned behemoth is taking more than anticipated time, and preparatory work is still far from complete. There are still some issues that need to be addressed with regard to the valuation of LIC, the report had stated citing a senior official of one of the merchant bankers.

The government has set a disinvestment target of Rs 1.75 lakh crore for FY22 and the LIC IPO is crucial for the government if this target is to be met. DIPAM, which manages the government’s equity in state-owned companies, has selected actuarial firm Milliman Advisors to ascertain the embedded value of LIC for meeting the government’s disinvestment target.

Earlier this year in July, the Cabinet Committee on Economic Affairs (CCEA) had given its in-principle approval for the listing of LIC. The government has already appointed ten merchant bankers for the transaction. In order to facilitate the listing of LIC, the government made about 27 amendments to the Life Insurance Corporation Act, 1956, earlier this year. In her Budget Speech 2021, Sitharaman had said the IPO of LIC would be launched in the financial year beginning April 1. Currently, the government owns a100 per cent stake in LIC.

The central government will hold at least 75% in LIC for the first five years post the IPO, and subsequently hold at least 51% at all times after five years of the listing, According to the amendment. The authorised share capital of LIC shall be Rs 25,000 crore divided into 2,500 crore shares of Rs 10 each. Up to 10% of the IPO issue size would be reserved for policyholders.

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