Manoj Kumar, Aftab Ahmad

NEW DELHI, (Reuters) – The embedded value of the State-run Life Insurance Corporation of India (LIC) has reached more than 5 trillion Rupees ($66.82 Billion), according to a government official overseeing this IPO.

Investors eagerly await the announcement by the government of LIC’s embedded Value – a measurement of future cash flows for life insurance companies, and the main financial indicator for insurers – when the draft prospectus for its initial public offering (IPO), is released. This will be in a matter days.

There has been some speculation in Indian media about this number – anywhere from $503 billion to as high $150 billion – but it is not the first time that the government is commenting. The government owns 100% of LIC.

It will be used to establish the market value of LIC as well as determine how much government money is raised in the flotation. It will allow the government to meet its divestment targets while limiting its fiscal deficit.

Tuhin Kanta Panday, secretary at the department of divestment said in an interview that “the embedded value could exceed five trillion rupees” and that the enterprise valuation will likely be higher.

India’s media reports have shown that LIC’s embedded value is approximately four times its market valuation.

LIC controls a large share of India’s insurance industry. The government expects to make as high as $12 billion by selling a stake at the IPO. It also hopes that the proceeds of the sale will be used to help bridge the deficit in fiscal 2014.

Pandey indicated that Pandey would release a draft prospectus on IPOs to investors within the next week.

($1 = 74.8250 Indian Rupees)