The country’s most awaited initial public offering, Life Insurance Corporation of India (LIC IPO) is likely to open on May 4 and is expected to close on May 9, sources told CNBCTV18, adding that the anchor book for the LIC IPO is likely to open on May 2. This development comes on the heels of the market regulator, Sebi, has given its nod to the updated draft red herring prospectus, which lists a 3.5 per cent stake sale instead of 5 per cent as mentioned in the previous draft papers, the news channel reported.
The government, which wholly owns the insurance behemoth, has cut the size of IPO from 5 per cent to 3.5 per cent due to the market condition. A proposal to reduce the size of LIC’s IPO to 3.5 per cent from 5 per cent proposed in its draft red herring prospectus (DRHP) was tabled and approved at a board meeting held on Saturday.
Reserved Portions And Policyholder Discounts
The reserved portions for policyholders and employees, and discounts, issue dates, and issue price will be known by Wednesday, sources aware of the development said. As per the LIC Act, the government can reserve up to 10 percent for the policyholders.
Earlier, the DRHP had mentioned that around half of the IPO issue has been fixed for qualified institutional buyers (QIBs). Out of the QIB’s portion, 60 per cent has been earmarked for anchor investors on a discretionary basis. One-third of the anchor investor portion will be reserved for domestic mutual funds. About 15 per cent will be reserved for non-institutional investors (NII). Around 35 per cent will be available for retail investors to participate. A significant portion, not exceeding 10 per cent of the public issue, will also be reserved for the policyholders. 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.
Anchor Investors
The LIC IPO has received Rs 13,000 crore worth of investment commitments from anchor investors, more than twice the value of shares offered to such investors, Mint reported citing sources.
LIC IPO: Embedded Value
LIC is valued at Rs 6 trillion, which is just 1.1 times its original embedded value of Rs 5.39 trillion, according to the revised estimates of the government. However, the embedded value may also be revised in the updated IPO documents that have been filed by the government with Sebi on Monday.
The LIC IPO will fetch Rs 21,000 crore to the exchequer. The government had initially wanted to list LIC in the last financial year that ended March 31 but had to delay the sale after the Russia-Ukraine war triggered a market rout. However, even after the reduced size of Rs 21,000 crore, the LIC IPO is going to be the biggest initial public offering ever in the country. Till now, the IPO of Paytm is the biggest one at Rs 18,300 crore in 2021, followed by Coal India Ltd at Rs 15,500 crore in 2010 and Reliance Power at Rs 11,700 crore in 2008.
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