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LIC initial public offering (IPO) expected to open on May 4th

The initial public offering (IPO) of Life Insurance Corporation (LIC) will begin on May 4 and end on May 9. The anchor book is set to open on May 2, but because May 3 is a holiday for Eid, the offering will open two days later for retail investors.

The government has reduced the offer amount to Rs 21,000 crore, according to investment bankers, and the issuance is now priced at 1.1 times its inherent value of Rs 5.4 trillion. The government hired Milliman Advisors to assess the nation's largest insurer in September 2021, and they came up with an embedded value of Rs 5.4 trillion. Embedded value is a measure of an insurer's consolidated shareholder value. Listed private sector insurers have traditionally valued at 2-3 times their embedded value.

According to market experts, the current valuation leaves a lot of money on the table for investors.

The issuance size was reduced from Rs 65,000 crore to Rs 50,000 crore when market conditions deteriorated following Russia's attack on Ukraine, which sent global markets into a frenzy. Market experts had encouraged the government to value the public issue at attractive valuations in March of this year in order for it to pass in the current market conditions. The issuance will not face any obstacles, according to bankers, because of better pricing and 10 million policyholders opening demat accounts to receive a further reduction on the IPO price.

On February 13, LIC filed its IPO draught documents. The government has until May 12 to file fresh papers with the Securities and Exchange Board of India in order to conduct the IPO.

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