Govt to take call on LIC IPO timing this week

New Delhi: The government is likely to take a call on the timing of LIC initial public offering within this week, a senior official said. The sale of 5 per cent stake or 31.6 crore shares in the country's largest insurer was originally planned for in March, but was postponed in view of the geopolitical tension.

The government has time till May 12 to launch the IPO without filing fresh papers with markets regulator Sebi.

The official said it would be a tough call to decide whether to go ahead with the retail and domestic investor demand or to wait for geopolitical tension to ease and FIIs to return to market. "A decision on timing the IPO would be taken this week," the official said.

LIC's embedded value, which is a measure of the consolidated shareholders' value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors. There were estimates made in certain quarters that LIC's market valuation would be about 2-3 times its embedded value. The official said that for a company of the magnitude of LIC, such high multiplier to embedded value may not be correct.

The official further said the IPO price would have to be fixed in a way that on the listing day there is an upside to the stock and investors get rewarded.

LIC is already a matured company and has seen business growth since its inception. The market valuation would have to be done keeping in mind its growth potential here-on, the official added. If the IPO is not launched now then fresh papers with updated quarterly results and valuations would have to be filed with Sebi till August or September.