New Delhi: The government's 5 percent equity holding in the Life Insurance Corporation of India (LIC) would be sold in the upcoming IPO, according to the Draft Red Herring Prospectus (DRHP) submitted with capital markets regulator SEBI today.
According to the DRHP, the government would sell 316 million equity shares to investors through the IPO, out of a total of 6.32 billion equity shares available. The LIC's DRHP has set the stage for the country's largest public offering. The LIC initial public offering (IPO) will be wholly an offer for sale (OFS) by the promoter, the Government of India.
The government plans to sell 316,249,885 equity shares with a face value of Rs 10 each in a public offering that will take place before the end of the current fiscal year in March. A week ago, the LIC's embedded value was set at more than Rs 5 lakh crore.
Because there will be no new issue of equity shares, the profits of the LIC share sale will go to the Government of India, and the insurance business will not get any revenues from the all-OFS IPO.
The public offering could help the government meet its lowered divestment objective of Rs 78,000 crore, down from Rs 1.75 lakh crore previously. The government has raised Rs 12,000 crore from divestment receipts so far this fiscal year. LIC is currently owned entirely by the Indian government. LIC is a state-owned insurance colossus that controls a sizable chunk of the market.
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