Indian Life Insurance Corp files $8 billion IPO documents


By Nupur Anand, Aftab Ahmed and Sudarshan Varadhan

NEW DELHI (Reuters) – The state-run Life Insurance Corporation of India (LIC) has filed draft documents with the market regulator to sell 5% of its shares to potentially raise nearly $8 billion , eclipsing the largest IPO in Asia’s third-largest economy by a considerable margin.

The offer is crucial to the efforts of the Narendra Modi-led government to achieve its sharply reduced divestment target for the current fiscal year and will provide a measure of the success of the government’s market-friendly policies.

India’s largest insurer will sell 316.25 million shares, according to the draft prospectus filed on Sunday, representing nearly 5% of paid-up share capital after the offering.

The government could raise just over 600 billion Indian rupees ($7.97 billion) from the issuance rather than the original plan of around 900 billion rupees, after cutting the supply due to the terms of the market, a government source said.

The list should be completed by the end of March, the source added.

The filing also indicated an intrinsic value of 5.39 trillion Indian rupees ($71.56 billion). Embedded value is a measure of future cash flows for life insurance companies and a key financial indicator for insurers.

The IPO is seen as a test of investors’ appetite for new deals, with a number of companies listed last year now trading below their offer prices due to concerns over high valuations and impending interest rate hikes by global central banks battling inflationary pressures.

The expected listing also comes amid foreign investors withdrawing funds from the domestic market.

The life insurance giant, which had more than 105,000 full-time employees at the end of September and is among the world’s top five insurers, manages more than $500 billion in assets and holds more than 60% of the Indian market. premium life insurance.

(Graphic: top five global insurers:

LIC has more than 280 million policies in force and a Brand Finance report estimated the insurer’s brand value at $8.66 billion.

Although the government’s reduction of its privatization target to $10.5 billion has increased uncertainty over the size of LIC’s expected offering, government officials have said investors should not assume that the revised target indicates smaller than expected IPO for LIC.

The most recent life insurer IPO in India was in 2017, when HDFC Life Insurance raised $1.3 billion. Its share price has nearly doubled since the IPO.

(Chart: India’s 10 largest IPOs:

LIC’s planned offering will eclipse payments company Paytm’s record $2.5 billion IPO last year. Although Paytm’s IPO was then the largest in the country, shares have since fallen 58% from its offering price.

Indian companies raised a record $16.6 billion from initial equity sales in 2021, 52% more than the previous record high in 2017, according to Refinitiv data.

The LIC listing could make it one of India’s five largest companies by market capitalization, joining telecoms group Reliance Industries, software services company TCS, HDFC Bank and IT giant Infosys.


Public companies that made the three largest previous IPOs have lost more than half of their market value since listing.

Coal India is trading at around 145 rupees per share, a far cry from its listing price of around 350 rupees in 2010.

Similarly, state insurers General Insurance Corp and New India Assurance are trading at just over 135 rupees per share, less than half their IPO price.

Government officials told Reuters that India would be “very sensitive” when pricing the issuance of LIC shares to ensure decent long-term investment returns. The price range will be decided in the next few days and roadshows for potential investors will begin shortly.

Goldman Sachs, Citigroup, Axis Capital, Nomura and SBI Capital Market along with five other banks are the bookrunners for the IPO, according to the draft documents.

(Additional reporting by Chandini Monnappa and Chris Thomas in Bengaluru, Rupam Jain in Mumbai and Manoj Kumar in New Delhi; editing by Andrew Heavens and David Goodman)


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