India seeks up to 10t rupees in valuation for insurer's mega IPO

[NEW DELHI] India is seeking a valuation of between 8 trillion rupees (S$146.05 billion) and 10 trillion rupees for state-backed Life Insurance Corp in what's slated to be the nation's biggest initial public offering.

The government is considering selling a 5 per cent-10 per cent stake in the company, which could raise between 400 billion rupees and 1 trillion rupees, according to people with knowledge of the matter, who asked not to be identified as the matter is private.

The potential valuation is based on preliminary talks and may change after further discussions, due diligence and an official valuation report, the people said. A spokesperson for the finance ministry declined to comment. LIC didn't immediately respond to an email seeking comment.

Prime Minister Narendra Modi's government is pushing ahead with LIC's IPO to help plug a widening budget gap as it aims to raise 1.75 trillion rupees by March through divestments.

The LIC sale is key to the government achieving this target. India may also allow foreign direct investment in the insurer to ensure diversified and strong demand across investors.

The sale could be "the mother of all IPOs so far in India," said Jyoti Roy, deputy vice president at Angel Broking. Although there will be appetite, the sale is likely to be at the end of the financial year, meaning it could "drain liquidity and impact the secondary market to some extent," he said.

Bankers met government and LIC officials last week to formally kick off the sale process. A listing is expected between January and March next year, Bloomberg has reported earlier.

The government selected 10 banks, including Kotak Mahindra Bank, Goldman Sachs, JPMorgan and ICICI Securities to arrange the IPO.

BLOOMBERG