At an expected mop-up of Rs 21,000 crore, the LIC IPO will be the largest public issue in the history of the Indian capital market as the government will dilute 3.5 percent stake in the state-run insurance giant by selling around 22 crore shares
The Life Insurance Corporation of India is expected to float its maiden public issue on May 4. The offer will remain open to subscription till May 9.
The board of the state-run insurer will meet today to officially announce the launch dates for the IPO, according to a report in Business Standard. The LIC board will also take a decision on the price band for the IPO, lot size, policyholder reservation, and discount.
As LIC gears up to go public, here are 9 highlights you should know
- At an expected mop-up of Rs 21,000 crore, the LIC IPO will be the largest public issue in the history of the Indian capital market.
- The government will dilute 3.5 percent stake in the state-run insurance giant by selling around 22 crore shares.
- The IPO values Life Insurance Corporation at Rs 6 lakh crore. LIC’s embedded value, which is a measure of the consolidated shareholders 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.
- The government last week filed draft papers with the markets regulator Securities and Exchange Board of India (Sebi), seeking exemption from the 5-percent stake sale norm, which makes it mandatory for companies with a valuation of over Rs 1 lakh crore to sell not less than 5 percent stake in the IPO.
- LIC has reserved 10 percent of the issue size for policyholders, and 5 percent for employees, and also plans to give a discount to them in the IPO. The discount for the policyholders and employees will reportedly range from 5 percent to 10 percent. LIC has reserved up to 35 percent of its total IPO size for retail investors.
- The government had filed LIC’s draft papers with the Sebi in February, aiming to raise around Rs 65,000 crore at a market value of Rs 12 trillion with a planned dilution of 5 percent stake.
- The LIC IPO will contribute a major chunk to the budgeted disinvestment proceeds for the current fiscal. The government has pegged its disinvestment receipts at Rs 65,000 crore for FY2022-23, up from Rs 13,531 crore mopped up last fiscal.
- Running on a network of over 13 lakh individual agents, serving nearly 29 crore policyholders, LIC held a market share of 61.6 percent in new business premium collections as of January 2022.
- According to the Economic Survey 2021-2022, life insurance penetration rose to 3.2 percent in 2020, which is close to the global average. The industry is expected to average an annual growth rate of 5.3 percent between 2019 and 2023, according to a report.
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