The central government has filed the draft prospectus of upcoming initial public offering (IPO) of Life Insurance Corporation (LIC) with market regulator Sebi. LIC IPO is going to be the biggest-ever stock market listing of the nation. Let’s take a look at details of LIC IPO before investing
LIC IPO Size:
The central government owns 100 per cent stake in Life Insurance Corporation of India. The upcoming LIC IPO will be an entirely offer for sale. The government is planning to offload 5 per cent stake or 316,249,885 equity in Life Insurance corporation of India.
“The IPO is 100 per cent OFS by GOI and no fresh issue of shares by LIC. For filing valuation about 31.6 cr shares are on offer representing 5 per cent equity," said department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey tweeted. To tap into nearly 30 crore LIC policyholders, the central government has allowed the company to reserve a portion for the policyholders. Under a first-of-a-kind policyholders’ quota, 10 per cent of the LIC IPO will be available at a discounted price. A certain portion of LIC IPO will also be reserved for the employees at a discounted rates.
LIC IPO Objective
The objects of the LIC IPO are to (i) achieve the benefits of listing the equity shares on the stock exchanges; and (ii) carry out the offer for sale of up to 316,249,885 equity shares by the Selling Shareholder. The Selling Shareholder (President of India acting through the Ministry of Finance, Government of India) will be entitled to the entire proceeds of the offer after deducting the Offer expenses and relevant taxes thereon. Our Corporation will not receive any proceeds from the offer, according to the draft prospectus.
LIC IPO Valuation
The embedded value of LIC IPO stood at around Rs 5.39 lakh crore as on September 30, 2021. The valuation of LIC IPO will be three to four times the embedded value.
LIC IPO Allocation for Anchor Investors
The largest insurer of India is likely to set aside 60 per cent of the Qualified Institutional Buyers portion for the anchor investors on a a discretionary basis. Out of this, one third of the anchor investor portion will be reserved for domestic mutual funds. If the anchor investor portion remains unsubscribed, the remaining equity shares will be added to the Net QIB Portion, according to the draft paper.
LIC IPO Quota for QIB, NII and Retail Investors
For the Qualified Institutional Buyers (QIB), the company will reserve 50 per cent of LIC IPO. The Non-Institutional Investors (NII) quota was fixed at 15 per cent. So for retail investors, LIC will reserve 35 per cent of the offer.
LIC IPO Quota for Policyholders, Employees
LIC IPO Listing
LIC IPO, the biggest IPO of India, is likely to hit the market by the second week of March.
LIC: Profile of Largest Life Insurer of India
LIC, one of the oldest insurance companies in India holds a 64.1 per cent market share in terms of premium (or GWP), a 66.2 per cent market share in terms of new business premium (or NBP), a 74.6 per cent market share in terms of number of individual policies issued, a 81.1 per cent market share in terms of number of group policies issued for fiscal 2021, as well as by the number of individual agents, which comprised 55 per cent of all individual agents in India as at March 31, 2021, according to draft paper.