Mega LIC IPO likely to open on May 4; issue size cut to Rs 21,000 crore: Report

New Delhi, Apr 25: The much awaited mega initial share sale of Life Insurance Corp. (LIC) has been announced and the issue will open on 4 May, according to a PTI report.

The bidding for IPO will end on till 9 May. The government is likely to sell a 3.5 per cent stake in Life Insurance Corporation (LIC) through an initial public offering which will hit the markets in the first week of the next month.

The issue size is expected to be worth Rs 21,000 crore, valuing the country's largest insurer at Rs 6 lakh crore.

In February, LIC had filed draft papers with Sebi wherein it had said that the government will sell 5 per cent stake or 31.6 crore shares in the state-run insurer.

However, the IPO plans faced headwinds due to the ongoing volatility in stock markets due to Russia-Ukraine war, forcing the government to cut the issue size to 3.5 per cent.

Reservations for policyholders and employees, and discounts, issue dates and issue price will be known by Wednesday.

The red herring prospectus shall be submitted with the SEBI by April 27. The government targeting to mop up the aforesaid amount expects a valuation of Rs. 6 lakh crore for the insurer.

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. LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal year. The government has pegged disinvestment receipts at Rs 65,000 crore for 2022-23, up from Rs 13,531 crore last fiscal year.