The Life Insurance Corporation (LIC) is set to launch its Rs 21,000 crore initial public offering (IPO), as indicated in a press conference held earlier today. This will be India’s biggest public issue yet. According to an estimate, LIC will become the country’s fifth most-valued listed firm with a market cap of over ₹6 trillion. The IPO is set to open for the general public on May 4, and close on May 9. It will open on May 2 for anchor investors and will be listed on the stock exchanges by May 17.
The government-owned insurance company is reportedly set to sell over 22.13 crore shares, within the price band of ₹902 and ₹949. Policyholders will get a discount of ₹60 per share, while retail employees and anchor investors will receive a discount of ₹45 per share. Additionally, there is an employee reservation of 5 percent or 15.81 lakh shares, and 2.21 crore shares or 10 percent has been reserved for policyholders. This move is set to offload a 3.5 percent stake in the company.
According to the red herring prospectus (RHP) approved by the Security and Exchange Board of India (SEBI), “Bids can be made for a minimum of 15 equity shares and in multiples of 15 equity shares thereafter.” Additionally, the LIC draft RHP said that NRIs and policyholders out of India cannot apply.
During the press briefing held in Mumbai earlier today, the Department of Investment and Public Asset Management secretary Tuhin Pandey said that LIC’s reduced IPO of ₹21,000 crores will be the biggest IPO yet. He added that the LIC valuation is “fair and attractive”, and that the government expects significant retail participation. According to Pandey, the IPO is also right-sized so as to not crowd the capital and monetary supply.
The DIPAM secretary further informed that the decision to list LIC was made based on the current market demand, reduced market volatility and the company’s performance. In response to a question about a follow-up public offer (FPO), he said, “We aren’t going to bring in any other FPO for LIC in the next year.” This is in line with the SEBI rules which state that companies cannot issue a FPO for at least six months after the IPO.
Reportedly, the shares to successful bidders will be allotted by May 12, and a refund will be processed for unsuccessful bidders on the same day. Additionally, the shares will be credited to the Demat accounts by May 16. Analysts have also speculated a record Demat and trading opening in the coming days as a result of increased investor participation due to this IPO.
The issue will be managed by ten book-running lead managers, including SBICAP, Kotak Mahindra Capital, ICICI Securities, Axis Capital, JM Financial, Goldman Sachs, JPMorgan, Citigroup, Nomura, and the Bank of America Securities.