The central government is pushing for a valuation of around Rs 15 lakh crore for the state-owned Life Insurance Corporation (LIC) which is set to file for an initial public offering (IPO) that could make the insurer India’s second largest company after Reliance Industries, reports Economic Times.
LIC’s embedded value, a key metric for insurers combining the current value of future profits with the net value of assets, is likely to be over Rs 4 lakh crore and its market value could be about four times of that amount though the eventual valuation is subject to change as the government awaits the final report on the insurer's estimated networth.
Currently, Reliance Industries Ltd and Tata Consultancy Services (TCS) are India’s biggest companies with market capitalisation of Rs 17 lakh crore and Rs 14.3 lakh crore respectively. LIC’s proposed valuation could make it surpass TCS to grab the second spot among India's biggest companies.
The central government is reportedly looking to divest about 5 per cent-10 per cent stake in LIC through its upcoming IPO as the insurer is set to file its draft red herring prospectus with the Securities and Exchanges Board of India (SEBI) by the end of this month.
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