Valuation down, LIC’s IPO size likely to be cut

New Delhi, April 22

The government is halving its fundraising goal for Life Insurance Corporation of India’s IPO to $3.9 billion, having had to cut its valuation estimates after feedback from investors, a source said.

Insurance behemoth valued at Rs. 6 lakh cr

• After feedback from investors, the government is halving the LIC’s IPO size to $3.9 billion
• The insurance behemoth is now valued at around Rs. 6 lakh crore
• Earlier, government estimates had called for the insurer to be valued at around Rs. 17 lakh crore

The drastic lowering of ambitions for the IPO — which would still be India’s largest to date — is a setback for Prime Minister Narendra Modi’s administration which had positioned the sale as the first and biggest of a wave of privatisations aimed at replenishing state coffers.

The state-owned insurance behemoth, also India’s largest domestic financial investor, is now valued at around Rs 6 lakh crore, according to the source, who declined to be identified as the IPO discussions were confidential.

Earlier, government estimates had called for the insurer to be valued at around Rs 17 lakh crore.

“Investors have become very risk averse in the past few months. After roadshows we realised there was no point in putting high valuation upfront. Higher valuation can be discovered post the listing,” said the source. — Reuters