LIC IPO: DRHP filed, govt to sell 316 million shares

According to a draft prospectus filed with the markets regulator on Sunday, the administration will sell around 316 million shares in the wholly-owned insurance company. The so-called embedded value of LIC, a key metric for insurers that combines the present value of future profits with the net value of assets, is pegged at 5.4 trillion ($72 billion).

India is looking to complete the mega-IPO by the end of the financial year in March to help bridge a large budget deficit. The sale, as India’s Aramco moment in the context of the Gulf oil giant’s $29.4 billion listing, will test the depth of India’s capital markets. It will also assess the global hunger that some regard as the state’s crown jewel, while others question the autonomy of an institution that is routinely put into service to protect banks and public sector companies.

LIC is a household name in India. With 2,000 branches, over 100,000 employees and around 286 million policies, the Mumbai-headquartered company reaches practically every corner of the country. The 65-year-old firm has approximately $530 billion in assets and 250 million policy holders and makes up about two-thirds of the market.

10% of the shares being offered will be reserved for policy holders, and another 5% will be reserved for employees. The new shares will not be offered, confirming the details previously reported by Bloomberg.

Bankers will now conduct road shows to woo international investors. While the prospectus did not provide a target, India needs to raise about 600 billion rupees ($8 billion) from asset sales to meet budget estimates.

The operator of digital payments app Paytm currently holds the record for the country’s biggest IPO after raising $2.5 billion in November listing.

LIC profit increased 1,440 crore ($191 million) in the six months to September, from 6.14 crore in the same period a year ago.