All about India's largest public issue: LIC IPO

2 May 2022 , 05:23 PM

India’s largest public issue LIC IPO is all set to launch on May 4 and the issue will close on May 9. The price band for the LIC IPO has been fixed at Rs902-949 per equity share. It will have an Rs60 per equity share discount for policyholders, and an Rs45 discount for employees and retail investors.

Retail investors will have a quota of 35 per cent of the IPO size, while 10 per cent of the IPO shares will be reserved for policyholders. Qualified institutional buyers (QIB) will have access to 50 per cent of the shares. The remaining five per cent is reserved for non-institutional buyers.

The LIC IPO is expected to garner up to Rs21,000 crore and its valuation stands at Rs6 lakh crore, which is 1.11 times the embedded value of around Rs5.40 lakh crore. This IPO is purely an offer for sale (OFS) where the government will carry its strategic sale of 3.5% in the insurer. The total number of shares offered in the IPO is 22.10 crore equity shares.

A bidder can invest in a minimum of one lot comprising 15 shares, and in multiples of 15 thereafter with a maximum cap of 14 lots.

Also, the government has proposed to keep 10% reserved for policyholders. However, policyholders who have their updated PAN link with their LIC policies and hold a Demat account are eligible for subscribing to the IPO. Apart from the government’s strategic sale plan, the object of the IPO is also to achieve the benefits of listing the Equity Shares on the stock exchanges.

Post the IPO, the government’s shareholding in LIC will be 96.5% from the current 100%.

Further, the 18 investment banks are competing to manage the LIC IPO and the last date to submit bids was Friday.

Domestic banks that have bid to manage the IPO include Kotak Mahindra Capital, Axis Capital, ICICI Securities, JM Financial, DAM Capital, Edelweiss, HDFC Bank, Yes Securities, SBI Capital and IIFL, while foreign investment banks in the running include Citi, Bank of America, HSBC, Goldman Sachs, JPMorgan, BNP Paribas, Nomura and CLSA, the people cited above said on condition of anonymity, the media reports added.

This government-owned insurer surely holds quite a significant leadership in the insurance industry. With more than six decades of experience, LIC is the largest insurer in India with a market share of 61.6% in terms of premium and a share of 61.4% e in terms of New Business Premium. Not just that, LIC holds dominance with 71.8% market share in terms of the number of individual policies issued, and an 88.8% market share in terms of the number of group policies issued for the nine months ended December 31, 2021.