LIC fixes the price band at Rs.902-949 a share for Rs.21,000 cr IPO. Rs.60 discount for policyholders

SEBIi has given its nod to the updated DRHP that lists a 3.5 percent stake sale, as against 5 percent as mentioned in the previous draft papers

Team PGurus

April 26, 2022

SEBIi has given its nod to the updated DRHP that lists a 3.5 percent stake sale, as against 5 percent as mentioned in the previous draft papers

LIC IPO is set to open on May 4, close on May 9

Public sector giant Life Insurance Corporation of India (LIC) has fixed the price band at Rs.902-949 per share for the Rs.21,000 crore public offer that is likely to open on May 4. LIC would offer an Rs.60 discount for policyholders and Rs.40 for retail investors and employees. The public issue is to open for subscription on May 4 and is expected to close on May 9, and the bid lot would be 15. Anchor investors can subscribe to the shares of the insurance company on May 2.

With this IPO, the government would offload a 3.5 percent stake in the insurance behemoth by selling 22.13 crore shares. LIC has reserved 2.21 crore shares or 10 percent of the issue size for its policyholders while 15 lakh shares for employees. After policyholders and share holders’ reservations, the remaining shares will be allocated in the ratio of 50 percent for qualified institutional buyers (QIB), 35 percent for retail investors, and 15 percent for non-institutional investors.

Officials said 60 percent of the QIB portion has been reserved for anchor investors. The government in February had planned to sell a 5 percent stake or 31.6 crore shares in the insurance behemoth and had filed draft papers with the Securities Exchange Board of India (SEBI), the regulator of Stock Exchanges.

Earlier reports were on the government’s decision to 5 to 10 percent of LIC for IPO. Last week, the government decided to lower the issue size to 3.5 percent. The government has also filed papers with SEBI seeking exemption from the 5 percent stake sale norm, sources said. According to the SEBI norms, companies with a valuation of over Rs.1 lakh crore have to sell a minimum 5 percent stake in the IPO.

LIC’s embedded value, which is a measure of the consolidated shareholder’s value in an insurance company, was pegged at about Rs.5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors. Based on investor feedback, the market value of Government-owned LIC has been pegged at 1.1 times its embedded value of Rs.6 lakh crore.

LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal. The government has pegged disinvestment receipts at Rs.65,000 crore for the current financial year, up from Rs.13,531 crore raised in the last fiscal.

PGurus is now on Telegram. Click here to join our channel and stay updated with all the latest news and views

For all the latest updates, download PGurus App.

Author
Recent Posts

Team PGurus

We are a team of focused individuals with expertise in at least one of the following fields viz. Journalism, Technology, Economics, Politics, Sports & Business. We are factual, accurate and unbiased.