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LIC IPO: Likely Valuation and Prospectus

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LIC IPO

Last Updated on May 2, 2022 by Vyshakh

Investors have been eagerly awaiting what could be India’s biggest public offering—LIC IPO. The government has set a target of achieving divestment of Rs. 1.75 lakh cr. for 2021-2022. So far, the government has only garnered Rs. 9,330 cr. through the sale of public sector undertaking (PSU) stake. The success of Life Insurance Corporation of India’s (LIC) initial share sale is crucial in getting closer to achieving the target.

IPO prospectus

Life Insurance Corporation of India is expected to file the draft papers for its ~Rs. 15-lakh-cr. IPO in the last week of this month. The prospectus will include information such as the embedded value of LIC and the number of shares on offer.

To know more about the LIC IPO, follow our article here: LIC IPO: Date, Price, Review, News, Application and Details!


Valuation and market value

As per a report by Bloomberg, LIC could be valued at about Rs. 15 lakh cr., equaling $ 203 bn. However, a completed valuation report is still underway. The state-run insurer’s embedded value will likely be over Rs. 4 lakh cr. At the same time, its market value could be up to four times that amount.

Policy changes to ensure the success of LIC IPO

From sending phone messages to publishing advertisements in newspapers and adjusting capital-market rules, authorities and executives are trying to make the record IPO a success. 

After consulting the finance ministry, the commerce and industry ministry has initiated some changes in the foreign direct investment (FDI) policy to facilitate the disinvestment of LIC.

The current FDI policy allows 74% foreign investment under the automatic route in the insurance sector. However, this rule doesn’t apply to the Life Insurance Corporation of India; it is administered through a separate LIC Act. As per SEBI rules, both FPI and FDI are permitted under public offer.

Aradhana Gotur
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