LIC IPO: Sebi approval to updated draft papers that lists 3.5% stake sale likely today

The IPO size has been slashed from 5% to 3.5% (Image: Reuters)

The government, which owns the IPO-bound insurance behemoth LIC, has filed a revised draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (Sebi), which is likely to give its nod to the preliminary document by April 25, CNBC TV18 said on April 24.

The development comes a day after news agency PTI claimed that the Centre had slashed the IPO size to 3.5 percent from 5 percent.

The government is targeting to raise Rs 21,000 crore by selling a 3.5 percent stake, or around 22 crore shares, through the initial public offering, the report said. This brings the valuation of Life Insurance Corporation of India to Rs 6 lakh crore, which is 1.1 times the embedded value of Rs 5.4 lakh crore.

According to CNBC TV18, the government is likely to file the red herring prospectus, or the final document, in the first half of next week.

The IPO would contribute a major chunk to the budgeted divestment proceeds of the current fiscal year. The government has pegged divestment receipts at Rs 65,000 crore for 2022-23, up from Rs 13,531 crore last fiscal.

LIC had filed the DRHP with Sebi in February, stating that the government would sell 31.6 crore shares in a 5 percent stake sale in the state-run insurer. The IPO plans, however, were deferred as the market faced volatility following the Russian invasion of Ukraine.

According to Reuters, LIC's listing is expected in the first week of May and the formal announcements related to price, issue date, reservations and discount are likely on April 27.