What is the update on the LIC IPO date and what is the size likely to be?

It looks like there is finally some clarity on the timing, pricing and the size of the IPO. As expected, the IPO is going to be smaller in size and also be tapping at a much lower valuation that envisaged originally. But, first, the government has filed a revised draft red herring prospectus (DRHP) with SEBI, and the DRHP is expected to get its nod for the preliminary document by Monday, April 25. Apparently, the issue size is slashed to 3.5%.

The government is now targeting to raise just about Rs.21,000 crore by selling a 3.5% stake in LIC. In terms of the IPO it will entail a total issue size of 22 crore shares via the IPO route. This makes it just marginal 15% larger in size than the Paytm IPO which was for Rs.18,300 crore. This also substantially scales down the valuation of Life Insurance Corporation of India to Rs.6 trillion, which is just about 110% of the embedded value of Rs.5.40 trillion.

The IPO if it goes through successfully will comprise about one-third of the total divestment target for the full year FY23. It may be recollected that the March 2022 IPO plans had to be deferred as the market faced extreme volatility following the Russian invasion of Ukraine and the spike in oil prices, apart from Fed hawkishness. LIC is expected to announce specific details on 27th April while the issue is expected to list in the first half of May 2022.