Reports hint at Rs 15-lakh-crore valuation for LIC, prospectus by end of this month

Life Insurance Corporation of India is likely to file the draft papers for its estimated Rs 15-lakh-crore public issue in the last week of this month.

According to a Bloomberg report, the state-run insurer will file the papers in the week starting January 31 for what is being touted as India’s biggest public offering. The prospectus will provide the embedded value of LIC as well as the number of shares on offer, the report said, adding that the deliberations are private.

Moneycontrol could not independently verify the report.

Reportedly, India is pushing for a valuation of about Rs 15 lakh crore ($203 billion) for the insurer, while a completed valuation report is still in the works. The embedded value of Life Insurance Corp is likely to be more than Rs 4 lakh crore, and its market value could be about four times that amount. Once the final report is in, the valuation the government is seeking could change.

“If investors agree with those calculations proposed by the government, LIC would join the league of India’s biggest companies – Reliance Industries Ltd and Tata Consultancy Services Ltd – that enjoy a market capitalisation of Rs 17 lakh crore rupees and Rs 14.3 lakh crore, respectively,” Bloomberg quoted a source as saying.

The success of the public issue is crucial for the government to inch closer to its Rs 1.75-lakh-crore divestment target for the fiscal 2021-22. So far, only Rs 9,330 crore has been mopped up through PSU stake sale.

To facilitate disinvestment of the country’s largest insurer, the commerce and industry ministry has introduced some changes in the foreign direct investment (FDI) policy, after taking views from the finance ministry.

According to the current FDI policy, 74 per cent foreign investment is permitted under the automatic route in the insurance sector. However, these rules do not apply to the Life Insurance Corporation of India (LIC), which is administered through a separate LIC Act. As per SEBI rules, both FPI and FDI are permitted under public offer, the Times of India reported.

From adjusting capital-markets rules to sending phone messages and publishing newspaper advertisements, authorities and executives are leaving no stone unturned in trying to ensure the record initial public offering is a success.