Life Insurance Corporation of India (LIC) filed the draft red herring prospectus (DRHP) with the market regulator for its much-awaited initial public offering (IPO). This is going to be the largest-ever listing in the history of Indian capital markets. “The DRHP of LIC IPO has been filed today with the SEBI,” department of investment and public asset management (DIPAM) secretary Tuhin Kanta Pandey tweeted.
LIC IPO Size:
The central government owned 100 per cent stake in Life Insurance Corporation. The upcoming IPO will be entirely offer for sale. The President of India, acting through the ministry of finance, Government of India, is the promoter.
Also Read: LIC IPO for Policyholders: 10% to be Reserved at Discounted Rated. How to Apply
The government is planning to offload 316,249,885 equity shares of face value Rs 10 each through the public issue, according to the draft prospectus. The proceeds of LIC IPO will go to the central government and the insurance company will not receive any funds as the issue will be entirely offer for sale.
LIC IPO Quota:
Around 50 per cent of LIC IPO will be reserved for the Qualified Institutional Buyers (QIB). For Non-Institutional Investors (NII), the portion will be around 15 per cent. Retail quota of LIC IPO has been fixed at 35 per cent of the offer. One-third of the anchor investor portion will be reserved for domestic mutual funds.
A significant portion will also be reserved for the policyholders and it should not exceed 10 per cent of the public issue. For employees also, 5 per cent of LIC IPO will be reserved. Both the employees and policyholders will get a chance to book LIC IPO at a discounted rate.
LIC IPO Value
The embedded value of LIC have been calculated at Rs 5.39 lakh crore as of September 31, 2022, according to the draft paper. The valuation of LIC IPO is likely to be three to five times the embedded value. At the current price, the LIC could command a valuation of over Rs 15 lakh crore post listing according to experts. Actuarial firm Milliman Advisors LLP India had worked out the embedded value of LIC. Deloitte and SBI Caps are appointed as pre-IPO transaction advisors.
LIC IPO and Government Divestment Target
LIC IPO is crucial for the central government to meet the disinvestment. The finance ministery has lowered the disinvestment target for the current financial year to Rs 78,000 crore during Budget 2022. It was estimated at Rs 1.75 lakh crore during Budget 2021. So far, the government has garnered a little over Rs 12,000 crore from divestments this fiscal. The government has planned to sell 5 per cent stake in Life Insurance Corporation of India to raise up to Rs 65,000 crore.
LIC IPO: Mother of All IPOs
LIC is the largest insurance company in India with a market share of 61.6 percent in new business premium collections. Spread across the country, it has 2,048 branches with 11.48 lakh agents. It has over 29 crore policyholders.
Kotak Mahindra Capital Company, Axis Capital, BofA Securities India, JM Financial, Goldman Sachs (India) Securities, ICICI Securities, Citigroup Global Markets India, JP Morgan India, Nomura Financial Advisory and Securities (India) and SBI Capital Markets are the book running lead managers for the company.
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