New Delhi: A day before state-owned insurance giant, LIC, opens its Initial Public Offering, the Congress on Tuesday alleged that the company’s stocks are being sold undervalue, and questioned the timing when the markets -- both domestic and global -- are in turmoil following the Russian invasion of Ukraine, rise in crude and metal prices and inflationary pressure, among other issues.
Senior Congress leader Randeep Singh Surjewala argued that the disinvestment drive of LIC has “undervalued the confidence and trust of 30 crore policyholders”.
Alleging undervaluation of the LIC shares in the highly-anticipated IPO, Surjewala said, “Why was the LIC valuation of Rupees 12-14 lakh crores in February 2022 reduced to Rupees six lakh crore in just two months?” The valuation of the company reduced to 1.1 times the embedded value from 2.5 times within two months. Surjewala said HDFC Life Insurance is currently trading at 3.9 times in respect of their embedded value. “Similarly, SBI Life is trading at 3.2 times and ICICI Prudential Life is trading at 2.5 times their embedded value,” he added.
An equity share of LIC is priced between ₹902 and 949 for general customers. The employees are given ₹45 discount while the policy holders can buy at a value lower by ₹60. The SBI life stock price stood at ₹1080 in the NSE on May 2 while HDFC life stock price dropped to ₹579 at the end of the trading window on Monday.
“LIC’s assets are valued at ₹39,60,000 crore. Its stock portfolio is valued at ₹50,000 crore. Between September-April 2021, income through investment was ₹3,35,000 crore. It gives employment to 13,54,000 families, of which, 12,80,000 are LIC agents and 1,14,000 are its employees,” the Congress leader added. He quipped that the Centre is “partially disinvesting” the major insurance company on the eve of ‘Akshaya Tritiya’, a day when new trades and businesses are kick-started.
{{/usCountry}}“LIC’s assets are valued at ₹39,60,000 crore. Its stock portfolio is valued at ₹50,000 crore. Between September-April 2021, income through investment was ₹3,35,000 crore. It gives employment to 13,54,000 families, of which, 12,80,000 are LIC agents and 1,14,000 are its employees,” the Congress leader added. He quipped that the Centre is “partially disinvesting” the major insurance company on the eve of ‘Akshaya Tritiya’, a day when new trades and businesses are kick-started.
{{/usCountry}}The government has other PSUs such as BPCL too, in the disinvestment pipeline.
The Congress had earlier questioned the Centre’s decision to sell Air India at a “very low profit” and had questioned the asset monetization policy of the government, terming it another disaster after demonetization.
Surjewala also questioned LIC’s valuation, after carrying out roadshows in India and abroad, reducing the disinvestment target from ₹70,000 crore by selling 5% to ₹21,000 crore by selling 3.5%. He further asked, “Why is the government trying to sell LIC when domestic and global financial markets are in turmoil?”
The secretary-in-charge of the public sector disinvestment had earlier said the government will abstain from selling stakes in blue-chip PSUs considering the bad market conditions.
“The intent, purpose and modus operandi of government’s desperation to list LIC IPO despite lower valuation permission to take into account key valuation indices, global uncertainties and a volatile market is deeply intriguing and highly questionable. That’s our only objection,” Surjewala said.
LIC was recently declared the 10th largest insurance brand in the world. However, the Centre had earlier announced the sale of the company’s 3.5% stake to fetch ₹21,000 crore. The offer had received a lukewarm response as a result of the current conditions in the global market.
The Centre had initially decided to sell LIC’s 10% stake and the company was then valued at ₹12-14 lakh crore. The government then decided to sell its 5% stake after observing the worsening global conditions.