LIC files updated draft IPO papers with SEBI

Life Insurance Corporation of India (LIC) has filed an updated draft red herring prospectus (DRHP) with capital markets regulator Securities and Exchange Board of India (SEBI). The revised draft paper for the public issue reflects the December quarter earnings, which the company had filed with the insurance regulator earlier this month.

SEBI has already approved LIC’s DRHP; the regulator gave its final observation on the draft document on March 8. But LIC released its December quarter financial results a few days later on March 11, which had to be included in the DRHP. The central government has filed the updated draft documents with the regulator, a news agency report states.

LIC posted a net profit of ₹234.91 crore for the three months ended December 31, 2021. It had registered a profit of ₹94 lakh in the year-ago period. For the nine months up to December 2021, the IPO-bound insurance PSU reported a net profit of ₹1,671.56 crore, as opposed to ₹7.08 crore in the corresponding period of the previous fiscal. Total income for the December quarter stood at ₹261.24 crore from ₹1.57 crore in the year-ago period.

First year premiums stood at ₹8,748.55 crore during the December quarter of FY22, compared to ₹7,957.37 crore in the same quarter of the previous year. Renewal premiums came to ₹56,822.49 crore, up from ₹54,986.72 crore in the December quarter of last fiscal. Single premiums went up to ₹32,190.15 crore from ₹34,063.96 crore. Total premium inched higher to ₹97,761.20 crore at the end of December quarter in FY22, from ₹97,008.05 crore.

As on December 31, 2021, total cash reserves, including cheques, drafts and stamps, rose to ₹1,228.17 crore from ₹2.12 crore.

The government has delayed the much-awaited initial public offering (IPO) of LIC in the face of high volatility in the domestic market due to the Russia-Ukraine war, as well as exodus of foreign institutional investors (FIIs). While the Centre has assured that it is keeping an eye on the situation and will launch the IPO soon, it is unlikely to happen in the current fiscal.

The Centre had filed the DRHP for the LIC IPO on February 13, which was approved in record time. The central government now has till May 12 to float the LIC IPO before the SEBI’s approval to the issue expires. Once that happens, the Centre will have to once again go through the process to secure the market watchdog’s approval.

The IPO was originally expected to take place this month, before the end of the current financial year, but had to be delayed on account of volatility in global and domestic equities. The Russian invasion of Ukraine, which began on February 24, caused a sharp correction in the Indian equity markets in line with the global markets.

Considering the market conditions, some merchant bankers wrote to the government to postpone the IPO as the prevalent conditions are not conducive for a successful issue. A group of ministers, including finance minister Nirmala Sitharaman, commerce minister Piyush Goyal and transport minister Nitin Gadkari, had also held a meeting on LIC IPO timing.

Meanwhile, the Centre says it is watching the markets before making up its mind on the issue. DIPAM secretary Tuhin Kanta Pandey recently exuded confidence that the IPO will be floated soon.

“We may be good to go and we are watching the market situation. Hopefully, we should be able to bring out the IPO soon,” said Pandey at an interaction organised by the Merchants' Chamber of Commerce and Industry.

"There are certain external factors affecting the markets because of the conflict in Europe and the government is watching the situation carefully," he added, without giving a concrete timeline for the LIC IPO. “We hope things will recover, oil prices will probably cool off and our hope is that volatility in the market will come down as the markets will come down with the new realities.”