LIC IPO: Know Listing Date, Reservation for Policyholders, Discounts, Other Key Updates

LIC IPO: Life Insurance Corporation of India (LIC), which has become almost synonymous with the country’s insurance industry, was set to go public in the current financial year. But the Rs 60,000 crore listing has hit a roadblock. The timing of LIC’s IPO hinges on the sentiment and stability of the markets improving. Amid geopolitical uncertainty, it’s a tall task to predict when the fog would clear out. So, quite understandably, the government does not want to risk sabotaging the LIC IPO in such volatile markets, and has pushed it out into early FY23.

Earlier this week, the centre had filed updated draft papers with the market regulator SEBI for the initial public offering of Life Insurance Corporation of India. According to sources, the updated draft red herring prospectus includes the third quarter financial results of LIC. The IPO-bound insurer reported a net profit of Rs 235 crore in the third quarter of the fiscal as against Rs 90 lakh a year ago. It had earlier only provided financial results until September 2021.

Last month, a government official had said it had time until May 12 to launch the LIC IPO without filing fresh papers with Sebi. The government intends to sell 5 per cent stake in LIC, which could fetch the exchequer in excess of Rs 60,000 crore.

LIC IPO: Details on Price Band, Discount Rate

This will provide details about the price band, discount for policyholders and retail buyers, and the actual number of shares to be put on the block, an official said told PTI. “We have got the approval of the DRHP and the next step would be to file the RHP, which will give details of the price band and the actual number of shares. We are watching the situation, and soon we will take a call on the timing of the share sale,” an official told the news agency.

LIC IPO: Reserved Portions

The issue is likely to have reservations for eligible employees and LIC policyholders of the company, according to the DRHP. One-third of the anchor portion will be reserved for domestic mutual funds.

The issue would be an offer for sale of 31,62,49,885 equity shares by the government, which holds a 100 per cent stake in the insurance behemoth. A total of 50 per cent of the net issue would be reserved for qualified institutional buyers (QIBs), whereas non-institutional buyers will have 15 per cent of shares allocated for them. The retail portion has been fixed at 35 per cent of the offer.

Referring to the pre-IPO valuation of LIC, FM Sitharaman on Monday said that the embedded value of the insurance behemoth was calculated in an “extremely scientific way” and disclosed in draft IPO papers filed with market regulator the Securities and Exchange Board of India (Sebi).

LIC IPO: Discount

The eligible policy holders of LIC will have up to a 10 per cent reservation, and may get a discount on offer price, FM Nirmala Sitharaman in Rajya Sabha. Policyholders must link Permanent Account Number (PAN) details with LIC policies to become eligible to get a discount on the IPO offer price.

At a 5 per cent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market and once listed its market valuation would be comparable to top companies like RIL and TCS. So far, the amount mobilised from the IPO of Paytm 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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