The Life Insurance Corporation of India logo outside the company's office in New Delhi. Photo: AFP / Nasir Kachroo / NurPhoto

India’s largest insurer Life Insurance Corporation is set to go public in what is expected to be the largest initial public offering in the country’s history.

The state-owned insurer is likely to file draft papers with the market regulator Securities and Exchange Board of India by November, reported the Press Trust of India. Government officials said they intended to make the public offering by this fiscal year and the draft red herring prospectus will be filed next month.

The insurer enjoys about 60% of India’s life insurance market share with assets of more than US$500 billion.

Last month, 10 merchant bankers were appointed to manage the mega initial public offering, which will be worth a potential $12.2 billion.

They include Goldman Sachs (India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd, Nomura Financial Advisory and Securities (India) Pvt Ltd, SBI Capital Market Ltd, JM Financial Ltd, Axis Capital Ltd, BofA Securities, J P Morgan India Pvt Ltd, ICICI Securities Ltd and Kotak Mahindra Capital Co Ltd.

Cyril Amarchand Mangaldas has been appointed legal adviser for the IPO.

Once the red herring prospectus is filed, merchant bankers will hold global and domestic roadshows for investors by January. The finance ministry is in the process of estimating the embedded value of the life insurer and subsequently, the ministerial panel on disinvestment will decide on the government stake that will be divested through the IPO.

The government has appointed actuarial firm Milliman Advisors LLP India to compute the embedded value of the insurer.

The government may also allow foreign investors to pick up a stake in the state-owned insurer. According to the rules framed by the market regulator, foreign portfolio investors are permitted to buy shares in a public offer.

However, since the LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with Sebi norms regarding foreign investor participation.

However, India reportedly wants to block Chinese investors from buying shares in the insurance giant, as the ties between the two countries have soured following border skirmishes last year.

India has curtailed Chinese investment in sensitive companies and sectors, banned many Chinese mobile apps and subjected imports of Chinese goods to extra scrutiny.

This public offering will form a major chunk of the government’s plan to raise 1.75 trillion rupees ($24 billion) by selling state-owned assets. The government also plans to offer majority stakes in four other state-run firms – Air India, Bharat Petroleum Corp, Shipping Corp of India and Container Corp of India.

The government had initially planned to sell a Life Insurance Corporation stake for the fiscal year beginning April 1, 2020, but had to put it off due to the Covid-19 lockdown and other curbs.