LIC IPO: The Cabinet Committee on Economic Affairs (CCEA) has likely cleared the initial public offer (IPO) plan for Life Insurance Corporation (LIC), sources told CNBC TV18. The government plans to list LIC on bourses by March of FY22. “The ministerial panel is set to decide on finer details, including pricing and the quantum of stake to be divested by the Centre,” sources said.
The company is working on embedded value, internal efficiency and product restructuring, sources added. The embedded value represents the market value of the company’s assets attributable to the shareholders.
It also includes the present value of the company’s future expected profits from its existing business portfolio as on the date of valuation. The planned stake sale in LIC was announced by Finance Minister Nirmala Sitharaman while presenting the Union budget for the financial year 2020-21.
As per the amendments proposed under the Finance Bill 2021, the authorized share capital of LIC shall be Rs 25,000 crore, divided into 2,500 crore shares of Rs 10 each.
The capital market regulator SEBI has also eased the minimum public offer norms in a bid to pave the way for the LIC IPO.
In February, the board of the Securities and Exchange Board of India (SEBI) has decided to recommend changes in regulations, and for issuers with post-issue market capital exceeding Rs 1 lakh crore, the requirement of minimum public offering (MPO) will be reduced from 10 per cent of post-issue market capital to Rs 10,000 crore along with 5 per cent of the incremental amount beyond Rs 1 lakh crore.