LIC IPO: Draft Prospectus To Be Filed By Next Week, Says DIPAM Secretary

After the Sebi approval, the issue is likely to hit the market in March, said DIPAM Secretary Tuhin Kanta Pandey

The IPO of LIC is vital for the government to meet the lowered revenue estimates of Rs 78,000 crore for the ongoing fiscal year. Image: Getty

New Delhi: The Centre likely to file draft papers for the mega initial public offering (IPO) of LIC with the Sebi by next week, while a portion of the issue would be reserved for anchor investors, a top government official has told PTI.

Tuhin Kanta Pandey, secretary in the department of investment and public asset management (DIPAM), said approval of the insurance regulator is awaited after which the draft prospectus, detailing the size of the share sale, will be filed.

After the Sebi nod, the issue is likely to hit the market in March, Pandey said.

The IPO of Life Insurance Corporation (LIC) is vital for the government to meet the lowered revenue estimates of Rs 78,000 crore for the ongoing fiscal year.

So far, the central government has raised about Rs 12,000 crore from Air India divestment and stake sale in other PSUs.

In her 2022-23 Budget speech, Finance Minister Nirmala Sitharaman said, “The public issue of the LIC is expected shortly.” Pandey said the embedded value of LIC has been arrived at and it has to now get clearance from insurance regulator IRDAI.

“Within 7 to 10 days, the DRHP (Draft Red Herring Prospectus) for LIC IPO will be filed. Informally, we have been consulting the Sebi on various issues. The size of the issue would be mentioned in the DRHP,” the secretary said.

The Centre aims to come out with the IPO and subsequently list LIC on the exchanges by March, he said.

“A portion of the IPO would be reserved for anchor investors like we have done in case of IPOs of IRFC and RailTel,” Pandey added.

Up to 10 per cent of the LIC IPO issue size would be reserved for policyholders.

According to PTI report, actuarial company 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.

The government has appointed 10 merchant bankers, including Goldman Sachs (India) Securities, Citigroup Global Markets India, and Nomura Financial Advisory and Securities (India) to manage LIC IPO.

The central government is planning to allow foreign investors to pick up stake in LIC. According to Sebi guidelines, foreign portfolio investors (FPI) are permitted to buy shares in a public offer.

FDI policy would have to be tweaked for FII/FPI investment in this IPO, as LIC is a corporation and not an insurance company.

The Cabinet committee on economic affairs in July last year had cleared the proposal for LIC’s IPO.