The shares of the Life Insurance Corporation that will be offered to the investors through an initial public offering from Wednesday have been “significantly undervalued”, the Congress alleged on Tuesday.

An initial public offering is a process in which private companies offer shares to the public by issuing new stocks. At the end of the IPO process, the company gets listed on the stock exchange and is allowed to raise capital from public investors.

Congress spokesperson Randeep Singh Surjewala made the allegation at a press conference a day before the IPO of India’s biggest insurer is slated to open.

The price band of the IPO will be Rs 902 to Rs 949 per equity share, the Union government said on April 27. The Centre hopes to raise Rs 21,000 crore through the public offer.

Surjewala said that the government had earlier set a target to raise Rs 70,000 crore by selling 5% stake, but later reduced the target to raising Rs 21,000 crore by selling 3.5% stake. He said the government has not explained the move.

The Congress leader alleged that the valuation of the state-owned company was reduced from Rs 12-14 lakh crore in February to Rs 6 lakh crore in April. He asked why the confidence and trust of 30 crore LIC policyholders had been “valued at a throwaway price”.

Surjewala said that when the prospectus for the IPO was filed in February, the disinvestment was aimed at 2.5 times the embedded value of the company. But now the valuation is about 1.1 times the embedded value.

The embedded value of a life insurance company is calculated by adding the present value of its future profits to the net asset value of its capital and surplus.

“Comparably, HDFC Life Insurance is trading at 3.9 times EV [embedded value], and SBI Life and ICICI Prudential Life trade at 3.2 times and 2.5 times their embedded value respectively,” Surjewala said.

He also claimed that the Centre had brought down the share price band of LIC from Rs 1,100 per share to the current band of Rs 902 to Rs 949 per share. “Some experts feel that the government will lose Rs 30,000 crore by reduction in embedded value and [paring down] the price band,” he said.

Surjewala also asked why the Centre was seeking to carry out the IPO when financial markets were in turmoil because of the war between Russia and Ukraine.