NEW DELHI: The share prices of Life Insurance Corporation (LIC) may be priced between Rs 400-600 a share when the public sector-juggernaut finally launches an initial public offering (IPO). Going by the first internal valuation made by the government, the Centre is expecting to mop up Rs 90,000 crore-Rs 1 lakh crore, government sources said.
“According to the internal valuation of its overall assets and embedded valuation, the price range is likely to be between Rs 400-600 per share,” a finance ministry source said. The official went on to point out that the price band has been estimated after taking into account both current market conditions and “downside risks”. However, Milliman Advisors, which is to determine the embedded value of LIC, is yet to give a final report.
“Unless there is big disruption in the market, the IPO will be in the same range, even with some downside risk. However, the final report is likely in July this year. So, the picture will be pretty clear by then. The target is to raise Rs 90,000 crore-Rs 1 lakh crore,” another official said.
The disinvestment of shares in LIC is among the most ambitious IPOs planned by the Government of India. Currently, the government owns a 100 per cent stake in LIC. Once it is listed on the markets, however, LIC is likely to become the country’s biggest company by market capitalisation with an m-cap of Rs 8-10 lakh crore.
The much awaited IPO is expected to hit the market by the last quarter of this year, according to divestment secretary Tuhin Kant Pandey’s comments in various post-budget media interviews.
According to the proposed amendments tabled in the parliament, the government plans to hold at least 75 per cent in LIC’s equity for the first five years after the IPO. After which this can be diluted further to 51 per cent in a phased manner. Government officials say that up to 10 per cent of the LIC IPO issue size would be reserved for LIC policyholders.