Kicking off the stake-sale process in Life Insurance Corporation of India, the government has floated a request for proposal to appoint an actuarial firm to calculate the embedded value of the life insurance behemoth.
“In view of the recent announcement by the Government of India in the Budget 2020-21, LIC needs to develop an Indian Embedded Value (IEV) reporting framework and calculate IEV of LIC for the necessary disclosures for the proposed IPO of LIC,” said the RFP issued by the Department of Investment and Public Asset Management (DIPAM).
It has, accordingly, sought bids from firms to work with the life insurer to develop IEV, in line with the requirements of the relevant Acts and regulations and to provide support during the IPO process.
“The Global Actuarial Firm would be required to work with the appointed Actuaries and Management of LICI to mutually agree on an appropriate methodology to be used in the calculations of IEV and determine IEV that complies with the requirements of Actuarial Practice Standards and Guidance Notes,” the RFP said.
According to the document, the Centre is looking to sell a minority stake in LIC. The end date for submitting bids is December 8, and a pre-bid meeting will be held on November 26.
The selected actuarial firm may also be required to interact with different advisors and stakeholders as well as regulators, including IRDAI and SEBI, specify the ‘scope’ of the data audit to be performed by the auditor, review iterations of the final results, and also provide inputs and review relevant sections of the IPO offer.
Finance Minister Nirmala Sitharaman had outlined plans to list LIC in the Union Budget 2020-21, along with a target of ₹2.1-lakh crore for proceeds from disinvestment.
“Listing of companies on stock exchanges discipline a company and provides access to financial markets and unlocks its value. It also gives opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of IPO,” she had said.
The timeline for the listing is still unclear. The government has appointed transactions advisors for the IPO.