LIC IPO: Here's all you need to know about public issue size, price band and valuation
The IPO is crucial for the Centre to meet its disinvestment targets. For the financial year 2022-23, the government has pegged divestment receipts at Rs 65,000 crore.
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The public issue of Life Insurance Corporation of India (LIC) is likely to open on 4 May. The initial public offering of the company will remain open till 9 May, as per reports.
The Union government, which owns 100 percent stake in the insurance company is plans to sell 3.5 percent of its stake. This is a fall from the earlier estimates of a 5 percent stake sale. The government plans to raise Rs 21,000 crore through the public issue. Approximately 22 crore shares will be on sale, as per a MoneyControl report.
The government had earlier planned to hold the public issue before 31 March this year, but delayed the move after the breakout of the Russia-Ukraine war.
The Centre needs to hold the public issue by 12 Mayor it will need to file fresh papers with the Securities and Exchange Board of India (SEBI). The government will also need to update the embedded value of LIC and release the results of the December quarter if it fails to hold the IPO by the allotted date.
The IPO is crucial for the Centre to meet its disinvestment targets. For the financial year 2022-23, the government has pegged divestment receipts at Rs 65,000 crore.
The value of LIC has been revised to Rs 6 trillion by the government, up 1.1 times its embedded value of Rs 5.39 trillion.
According to a LiveMint report, LIC has received Rs 13,000 crore worth of investment commitments from anchor investors, which is more than double the value of the shares offered to such investors. The IPO will be priced in the range of Rs 950-1,000 per equity share, according to News18.
According to reports, 50 percent of the LIC public issue will be reserved for Qualified Institutional Buyers (QIB) and 15 percent for Non Institutional Investors (NII). The remaining 35 percent of the quota had been fixed for retail investors. Domestic mutual funds will have one-third of the anchor investor portion reserved for them.
Ten percent of the LIC issue will be reserved for policyholders and five percent for employees. Employees and policyholders will also get the opportunity to book their shares in the insurance company’s public issue at a discount.
The public issue is set to be the largest in the country's history.
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