The draft red herring prospectus (DRHP) for the proposed IPO will be filed after the board approval. “Key decisions on how much discount will be offered to policyholders in upcoming issue may also get cleared in the meeting tomorrow (Friday),” said another person aware of the details.
The insurance regulator has given its clearance to the listing and a formal communication on this is expected soon, another official said.
The country’s biggest life insurer can offer as much as a 5% discount to its policyholders and reserve up to 10% of the issue size for them. The government is likely to offload around 5-10% stake in LIC, depending on its valuation.
In a post-budget interaction last week, Department of Investment and Public Asset Management secretary Tuhin Kanta Pandey told ET that the DRHP will be filed in the ongoing week.
Government’s Eye on Divestment Target
Insurance Regulatory and Development Authority of India clearance is expected anytime now. It (LIC IPO) will bring a lot of depth to the market. It will also bring new investors to the market,” he had said. Once the DRHP is filed, the offer price is expected to be fixed quickly as the government is keen to bring the public issue within this fiscal year.
In the budget for fiscal 2023 announced last week, the government has set a disinvestment target of ₹65,000 crore for the year. It also lowered the current fiscal year’s target from ₹1.75 lakh crore to ₹78,000 crore.
So far, ₹12,029 crore has been raised through stake sales this fiscal year. The PSU insurer’s public offer is expected to be the biggest ever in India and help the government reach the revised disinvestment target for the year.
Foreign investors will be able to participate in the IPO with the government looking to make changes to the foreign direct investment regime ahead of the public listing. The LIC Act, which governs the insurer, does not mention foreign investment and limits any shareholder other than the central government to a maximum of 5% stake.
The government has appointed 10 merchant bankers, including the Goldman Sachs Group, JP Morgan Chase & Co and ICICI Securities to manage the LIC issue.
Actuarial firm Milliman Advisors LLP India has been engaged for assessing the embedded value of LIC, while Deloitte and SBI Caps were appointed as pre-IPO transaction advisors.
The Cabinet Committee on Economic Affairs had in July last year cleared the proposal for LIC’s IPO.
