Govt to raise about Rs 30,000 crore through LIC IPO

Life Insurance Corporation of India (LIC) had to cut its valuation estimates to 300 billion rupees after getting feedback from investors. The IPO is likely to be launched in the first week of May.

India's largest domestic financial investor is now valued at around 6 trillion rupees. Earlier government estimates had called for the insurer to be valued at around 17 trillion rupees. The government plans to sell a stake of just over 5%.

Despite the halving of the government's fundraising goal, it would still be India's biggest IPO to date. The government had initially wanted to list LIC in the last financial year that ended March 31 but had to delay the sale after Russia's invasion of Ukraine triggered a market rout.

The LIC IPO will be the largest such offering to hit the Indian stock markets and is expected to help the government achieve its disinvestment target of Rs 65,000 crore for FY23. The government has collected Rs 3,026 crore from the offer-for-sale of Oil and Natural Gas Corp. Ltd.

It is said that investors have become very risk averse in the last few months. After roadshows it has been realised there was no point in putting high valuation up front. Higher valuation can be discovered post the listing. After all, the government will still hold nearly 95% of the issue.

Investors have been concerned that LIC's investment decisions, including those in loss-making state companies, could be influenced by government demands. The 66-year-old company dominates India's insurance sector with more than 280 million policies. It was the fifth-biggest global insurer in terms of insurance premium collection in 2020.