IPO IPO: Life Insurance Corporation of India (LIC), which has become almost synonymous with the country’s insurance industry, is set to go public in the current fiscal year. But the Rs 60,000 crore list has reached a roadblock. The timing of LIC’s IPO will depend on improving sentiment and stability in the markets. Amid geopolitical uncertainty, predicting when the fog would clear is a big task. So it’s understandable that the government doesn’t want to risk sabotaging LIC’s IPO in such volatile markets, and has pushed it into early FY23.
Earlier this week, the center had submitted updated draft documents to market regulator SEBI for the IPO of Life Insurance Corporation of India. According to sources, the updated draft of the red herring prospectus includes LIC’s third quarter financial results. The IPO-linked insurer reported a net profit of Rs 235 crore in the third quarter of the fiscal year against Rs 90 lakh a year ago. Previously, it only delivered financial results until September 2021.
Last month, a government official had said it had until May 12 to launch LIC’s IPO without submitting any new papers to Sebi. The government plans to sell a 5 percent stake in LIC which could bring the treasury more than Rs 60,000 crore.
LIC IPO: Details on Price Range, Discount Percentage
This will provide details on the price range, discount for policyholders and private buyers, and the actual number of shares that will be placed in the block, an official told PTI. “We have the approval of the DRHP and the next step would be to file the RHP which will provide details on the price range and actual number of shares. We are monitoring the situation and will call shortly about the timing of the share sale,” an official told the news agency.
LIC IPO: Reserved Portions
According to the DRHP, the issue will likely be reserved for eligible employees and LIC policyholders of the company. One third of the anchor portion is reserved for domestic mutual funds.
The issuance would be a sale offer of 31,62,49,885 shares by the government, which has a 100 percent stake in the insurance giant. In total, 50 percent of the net issuance would be reserved for qualified institutional buyers (QIBs), while non-institutional buyers will receive 15 percent of the shares for them. The retail area is set at 35 percent of the supply.
Referring to LIC’s pre-IPO valuation, FM Sitharaman said Monday that the insurance giant’s embedded value was calculated in an “extremely scientific manner” and disclosed in draft IPO documents filed with market regulator, the Securities and Exchange Board of India (Sebi).
LIC IPO: Discount
The eligible policyholders of LIC have a reservation of up to 10 percent and can get a discount on the offer price, FM Nirmala Sitharaman in Rajya Sabha. Policyholders must match the Permanent Account Number (PAN) information with the LIC policies to be eligible for a discount on the IPO offer price.
At a share dilution of 5 percent, LIC’s IPO would be the largest ever in the history of the Indian stock market and once listed, its market value would be comparable to top companies such as RIL and TCS. So far, the amount mobilized from Paytm’s IPO in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
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