LIC IPO Can Be Delayed Till May 12, No Need For Fresh SEBI Filing Delay

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The government now has until May 12th to conduct the LIC initial public offering. According to an official, the company is requesting updated permission from market regulator SEBI. If the government misses the May 12 deadline, LIC would have to submit fresh paperwork with SEBI, in which it will have to declare the results of the December quarter as well as update the embedded value, according to the official. The LIC IPO was supposed to go live in March, but the Russia-Ukraine conflict threw a wrench in the plans.

The government had filed the draft red herring prospectus (DRHP) for the IPO with the market regulator SEBI on February 13. “We have a window till May 12 to launch the IPO based on the papers filed with SEBI. We are watching the volatility and will file the RHP giving the price band soon,” the official said. The DRHP filed with SEBI and gave details of the financial results of LIC and also the embedded value in September 2021.

LIC’s embedded value

The worldwide actuarial firm Milliman Advisors estimated LIC’s embedded value, which is a measure of the combined shareholders’ worth in an insurance business, to be around?5.4 lakh crore as of September 30, 2021. However, the DRHP has been adamant about not releasing the LIC’s market value, which would be around three times the embedded value according to industry standards.

To fulfill the reduced disinvestment target of?78,000 crore in the current financial year, the Centre had anticipated raising over? 60,000 crore by selling roughly 31.6 crores or 5% of the life insurance firm’s shares. The LIC IPO will be the largest in Indian stock market history, with a stake dilution of 5%, and once listed, LIC’s market capitalization would be similar to top businesses like RIL and TCS. However, the government has not specified the discount that policyholders and LIC workers will receive in the public selling in the DRHP.

Employees may get up to 5% of the issue size, while policyholders may receive up to 10%, according to industry standards. Until this point in the current fiscal year? Through OFS, employee OFS, calculative disinvestment, and buyback, a total of 12,423.67 crores has been raised.

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