LIC IPO | LIC may become biggest stock in equity market, says Chris Wood

Life Insurance Corporation of India has the potential to become the biggest stock in the Indian markets, said Christopher Wood, head of global equity strategy at the US-based investment bank Jefferies.

Referring to the result of government stake sale in Chinese companies back in the 2000s, Wood said in his newsletter Greed & Fear that listing of prominent state-run enterprises can lift significantly the overall market capitalisation of the entire Indian stock market which is worth $3.5 trillion now.

Backed by a booming economy and a rising stock market, the early 2000s saw a host of Chinese state-owned companies list in the public markets, which went on to become some of the highest-valued companies globally before the Global Financial Crisis of 2008.

Back home, the initial public offering of LIC has become the most anticipated event in the history of the Indian capital market not only because of its sheer size, but also due to the profile of the company.

The life insurer is expected to bring its public issue at a valuation of around Rs 12 lakh crore to Rs 15 lakh crore, which would help the government raise enough funds to meet its Rs 78,000-crore divestment target for 2021-22.

LIC is widely expected to file the draft red herring prospectus for its IPO later today with reports suggesting that the company’s board is meeting to approve the public issue.

Bloomberg on February 10 reported that the government is likely to sell a 5 percent stake in the life insurance behemoth. As and when the IPO is launched, it will become the biggest in the country’s history.

In November, fintech major One97 Communications broke the record for the largest IPO with its Rs 18,300-crore issue. Prior to that, the largest public issue was that of Coal India's in 2010 raising around Rs 15,000 crore.