LIC IPO likely cleared by Cabinet Committee on Economic Affairs

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The Cabinet Committee on Economic Affairs (CCEA) has likely cleared the initial public offer (IPO) plan for Life Insurance Corporation (LIC), sources told CNBC TV18. The government plans to list LIC on bourses by March of FY22.

"The ministerial panel is set to decide on finer details, including pricing and the quantum of stake to be divested by the Centre," sources said.

The company is working on embedded value, internal efficiency and product restructuring, sources added.

The embedded value represents the market value of the company’s assets attributable to the shareholders. It also includes the present value of the company’s future expected profits from its existing business portfolio as on the date of valuation.

The planned stake sale in LIC was announced by Finance Minister Nirmala Sitharaman while presenting the Union budget for the financial year 2020-21.

Centre has picked SBI Capital Markets and Deloitte as the pre-IPO advisors for what could be the country’s largest IPO.

The Centre reportedly targets to raise around $24 billion through the ambitious disinvestment programme. The total assets of LIC are estimated at around Rs 32 trillion ($439 billion), as of financial year 2019-2020, according to the company's latest annual report.

The insurer holds a dominating domestic market share of close to 70 percent.  Currently, the government holds 100 percent stake in LIC.