By Vrishti Beniwal and Ruchi Bhatia
India aims to seek final regulatory approval for the initial public offering of its state-run insurer next week.
The draft prospectus for Life Insurance Corporation of India is in the final stages and is awaiting approval from the insurance regulator, said Tuhin Kanta Pandey, the top government official in charge of asset sales. The prospectus is expected to be submitted to the capital markets regulator in 7-10 days and will indicate the approximate size of the sale, he said.
The comments come after India sharply reduced asset-sale targets at its budget announcement on Tuesday, raising questions about how much it plans to raise from the LIC IPO.
Prime Minister Narendra Modi’s government announced it estimates Rs 78,000 crore ($10.4 billion) from divestment in the year through March 31, much lower than the Rs 1.75 lakh crore budgeted earlier. It has already raised Rs 12,000 crore by selling stakes in other companies.
For the next financial year, the target is Rs 65,000 crore.
Valuation Unclear
The revised estimates include proceeds from LIC but the breakdown is yet to be decided until the valuation of the insurer is finalized, Pandey said. The valuation depends on calculation of the so-called embedded value, which is still pending.
That’s a key metric for insurers combining the current value of future profits with the net value of assets for arriving at the valuation of an insurer.
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