LIC’s IPO is unlikely to come in this financial year. here is why

A senior official of a merchant banker said that there are still some issues that need to be addressed regarding the valuation of LIC.

The official said that even after the evaluation, several regulatory processes have been completed.

The official said the initial public offering (IPO) that requires a review is not only from the Securities and Exchange Board of India (Sebi) but also the Insurance Regulatory and Development Authority of India (Irdai), which has been headless for almost seven months.

evaluation of LIC Another official said it is a complex process due to its size, product mix, real estate assets, subsidiaries and profitability sharing structure, and the size of the share sale depends on valuation.

Given the number of regulatory processes, the official said meeting the deadline for the fourth quarter of the current financial year would be difficult to meet any conceivable.

Government is counting on the listing of LIC’s IPO BPCL Strategic sales to meet your disinvestment target 1.75 lakh crores.

Recently, while speaking about disinvestment, Finance Minister Nirmala Sitharaman had said that the government is making good progress.

“Bureaucracy and tying up loose ends between various departments takes its time and we are trying to speed it up,” he said.

The Cabinet Committee on Economic Affairs (CCEA) in July gave in-principle approval for listing of LIC. The government has already appointed 10 merchant bankers for the transactions.

Earlier this year, the government made about 27 amendments to the Life Insurance Corporation Act, 1956 to ease the listing of LIC.

As per the amendment, the central government will hold at least 75 per cent stake in LIC for the first five years after the IPO, and subsequently at least 51 per cent at all times after five years of listing.

The authorized share capital of LIC will be 25,000 crore divided into 2,500 crore shares 10 each, as per the amended law. Up to 10 percent of the LIC IPO issue size will be reserved for policyholders.

In her budget speech 2021, Sitharaman had said that LIC’s IPO will be launched in the financial year beginning April 1. At present, the government holds 100 per cent stake in LIC.

Once listed, LIC has the potential to become one of the largest domestic companies by market capitalization with an estimated valuation of 8-10 lakh crores.

The Department of Investment and Public Asset Management (DIPAM), which manages the government’s equity in state-owned companies, has selected actuarial firm Milliman Advisors to ascertain the embedded value of LIC to meet the government’s disinvestment target. has done.

This story has been published without modification in text from a wire agency feed. Only the title has been changed.