LIC IPO may hit the market in mid-May 2022 amid volatile market situation

Life Insurance Corporation of India (LIC) reportedly will not launch its initial public offering (IPO) in the financial year 2021-22 (FY22) due to the volatility in the market triggered by the Russia-Ukraine conflict. Earlier, the plan was to list the country's biggest insurer before the end of the current financial year.

Now, the central government has time until May 12, 2022, to launch the LIC IPO without filing fresh papers with markets regulator SEBI.

The initial public offering (IPO) of Life Insurance Corporation of India (LIC) is completely an offer for sale of 31,62,49,885 equity shares or 5 per cent stakes by the promoter, which holds a 100 per cent stake in the insurance behemoth. The share sale could be worth around Rs 65,400 crore.

Recently, Union Finance Minister Nirmala Sitharaman said that the ongoing geopolitical situation may force the government to review the timing for the launch of the IPO, which is going to be the largest IPO to date. The plans related to the initial public offering of LIC was first announced by the Union Finance Minister Nirmala Sitharaman in February 2020 but was deferred due to the pandemic.

The government filed the draft red herring prospectus (DRHP) for the IPO with SEBI on February 13, 2022, which granted its approval for the same last week. The DRHP filed with Sebi had details of the financial results of LIC and also the embedded value till September 2021. Employees and policyholders of the insurance behemoth would get a discount over the floor price.

The embedded value of LIC is around Rs 5.40 lakh crore. LIC has the largest share in India's life insurance market at 64.1 per cent in terms of premium and 66.2 per cent share in terms of New Business Premiums.