Life Insurance Corporation (LIC's) mega initial public offer is likely to be launched in the next fiscal as the centre would first have a glance on the independent actuarial valuation of LIC, a top official is quoted as saying in a PTI report.
As per Tuhin Kanta Pandey, Department of Investment and Public Asset Management (DIPAM) Secretary, the pre-IPO related work for LIC is being carried out in 4 steps involving
1. Appointment of advisors that would ensure compliance
2. Legislative modification- For it Department of Financial Services (DFS) is coordinating with DIPAM in order to enact changes in the LIC Act for enabling the launch of LIC IPO.
3. Changes being implemented in the company's internal software for giving out its 'embedded value'. "Third, is the issue of internal changes in LIC like software changes to come out with embedded value. LIC has been doing old-style actuarial valuation. But for IPO they need to do embedded value," added Pandey.
4. Appointment of actuary for arriving at the actuarial valuation of the country's largest insurer. DIPAM would float a Request for Proposal (RFP) for appointing an actuarial firm.
After these 4 aspects are done with, quantum of the stake sale by the government in LIC shall be decided. "Then the IPO decision would be there, what percentage of IPO we will go forward. Only after these four things converge... we are trying our best to do this fiscal. But this IPO is a big issue and I think it will take time," Pandey is quoted as saying in a PTI report.
The dilution of centre's stake in LIC is essential in order to meet the government's massive divestment target of Rs. 2.1 lakh crore for the FY21. Further to go ahead with the stake sale in LIC, the government is considering amendment of the Act under which LIC was established.
SBI Caps and Deloitte are the pre-IPO advisors to the issue working with LIC and preparing the items of compliance.
With Inputs From PTI