Norway’s Norges Bank Investment Management, Singapore’s GIC Pte and Abu Dhabi Investment Authority have committed to become anchor investors in the LIC IPO. The formal announcement is likely to be made Monday, according to a Bloomberg report. The Life Insurance Corporation IPO is expected to launch on May 4 and close on May 9. The IPO subscription window for anchor investors will open on May 2.
LIC IPO Date, Price, Quota
The LIC IPO will be open for applications on May 4 and will close on May 9, with anchor investors participating on May 2. The price range is set at Rs 902-Rs 949 per share of shares. The government is selling 3.5 percent of its stake in LIC and expects to raise about Rs 21,000 crore through the IPO, which is less than previous projections of about Rs 60,000 crore.
Its size has been reduced significantly in the wake of the Russia-Ukraine war and volatile market conditions around the world.
Retail investors are eligible to participate in approximately 35 percent of the size of the IPO offering and approximately 15 percent will be reserved for non-institutional investors. One third of the anchor investor portion will be reserved for domestic mutual funds. A significant portion, no more than 10 percent of the public issue, will also be reserved for policyholders. 5 percent of LIC’s IPO is also reserved for employees. Both employees and policyholders will have the opportunity to book LIC IPO at a discounted rate.
About half of the IPO problem has been solved for qualified institutional buyers (QIBs). Of the portion of the QIB, 60 percent is earmarked for anchor investors on a discretionary basis.
LIC valuation
The state insurance giant is valued at Rs 6 lakh crore. It has disclosed its embedded value (EV) at around Rs 5.4 lakh crore. The embedded value is the sum of the present value of future earnings and the adjusted net asset value. It can be considered comparable to the carrying amount, but adjusted for future provisions and cash flows.
DIPAM Secretary Tuhin Kanta Pandey has said Life Insurance Corporation’s valuation is “fair and attractive” and that the government expects significant private investor participation in the LIC IPO. “LIC IPO will not displace capital and money supply in the market. The public offering is appropriately sized given the constraints in the market. The government has a long-standing commitment to listing LIC and listing LIC is a strategic long-term vision from the government.”
LIC shares: gray market premium
The premium on gray market LIC shares rose 80 percent on Thursday, and the company’s IPO is set to begin next week. LIC shares had a premium of Rs 45 above the top of the price band set for the IPO, compared to Rs 25 on April 27, according to IPOWatch, which tracks unofficial prices of upcoming IPOs, otherwise known as the gray market prices. . Experts expect the gray market premium to rise closer to the launch date.
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