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14 February 2022 Insurance

India files to sell 5% stake in top life insurer LIC in would-be largest-ever IPO

India has filed to sell up to a nearly 5% stake in its largest life insurer LIC in what is being hailed as the country's shot at its single-largest ever IPO, preliminary issue documentation for the deal has indicated.

The Indian state, sole owner of Life Insurance Corporate of India (LIC), filed to sell up to 316 million shares. Media have previously reported a hoped-for take of nearly $8 billion, although the early form documentation offers no confirmation.

LIC is billing itself as the world's fifth largest life insurer by GWP and the largest player on an Indian market that remains underpenetrated but at the cusp of major growth for financial savings rates.

The Indian life insurance market is called the world's tenth largest, now growing at an 11% CAGR clip over the past 5 years, gains that have helped drive down expense ratios into a competitive realm.

The preliminary documentation offers no ready timeline for the deal or pre-sale book building, but market speculation has focused on an end-March deadline to include the take in the government budget.

Likewise, no price range has yet been set for the offer, but peer valuations could be built against LIC's ₹4.70 ($0.062) per share EPS for the fiscal year ended March 31, 2021 (up from ₹4.29 the year prior) or the per share net asset value of ₹12.68 reported for end-September 2021 (₹10.30 end-March 2021).

For the fiscal year ended March 2021, the group had swung to a net profit of  ₹45 billion ($605 million) on a 6% rise in net earned premiums to ₹4058 trillion ($53.7 billion).

By law, the state is required to lock up a 20% stake for 18M and the state has vowed to hold the full stake for a minimum 6M from the IPO.

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