- LIC IPO is going to be the biggest initial public offering ever in the country
- The government is diluting its 3.5 per cent stake in the insurance behemoth
- The government aims to generate about Rs 21,000 crore from the offer
LIC IPO Date: The initial public offering (IPO) of insurance behemoth Life Insurance Corporation (LIC) will open for subscription today. LIC is a state-owned insurance group and investment company. Headquartered in Mumbai, LIC is the country's largest life insurer. The issue will close on May 9 and allotment will be done next week.
LIC has set the price band at Rs 902-949 per share of the face value of Rs 10 each for its Rs 21,000 crore IPO. LIC is offering a discount of Rs 60 to its policyholders while a discount of Rs 45 to retail investors and employees. At the upper end of the price band (Rs 949) the government will garner around Rs 21,000 crore.
With this IPO, which is through an offer-for-sale (OFS) route, the government is looking to divest its 3.5 per cent stake in the insurer by selling 22.13 crore shares. The stake of the Government of India will come down to 96.5 per cent. Out of the shares, up to 1,581,249 units are reserved for employees and up to 22,137,492 are reserved for the policyholders.
Of the total offer size, 50 per cent of the net offer is reserved for qualified institutional buyers, 35 per cent for retail investors, and the remaining 15 per cent for non-institutional investors.
LIC IPO Lot Size and Listing Date
Retail investors, LIC employees and LIC policyholders can bid for a minimum of 1 lot. 1 lot has 15 shares. Investors can bid for a maximum of 14 lots or an amount not exceeding Rs 2 lakh. Accordingly, investors can bid for 14 lots which means 210 shares for an amount of Rs 1,99,290.
LIC IPO or shares will start trading on the stock exchanges (BSE and NSE) on May 17.
LIC IPO GMP
LIC IPO is commanding a good premium in the grey market. LIC IPO is trading at 9 per cent in the grey market over its upper price band of Rs 949. According to IPO Watch and IPO Wala, LIC share is trading at a premium of Rs 85 (roughly 9 per cent) per share in the grey market on Wednesday morning.
LIC IPO biggest in the country
LIC reduced its IPO size to 3.5 per cent from 5 per cent decided earlier due to the prevailing market condition. Even after the reduced size of about Rs 20,557 crore, LIC IPO is going to be the biggest initial public offering ever in the country.
So far, the amount mobilised from the IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.
LIC raises Rs 5,627 cr from anchor investors
LIC on Tuesday said it has garnered a little over Rs 5,627 crore from anchor investors led primarily by domestic institutions. Anchor Investors' (AIs) portion (5,92,96,853 equity shares) was subscribed at Rs 949 per equity share, the insurer said in a filing to exchanges.
Out of the allocation of about 5.9 crore shares to AIs, 4.2 crore shares (71.12 per cent) were allocated to 15 domestic mutual funds through 99 schemes, the filing said.
Besides, investment was made by some domestic insurance companies and pension funds. Some of the prominent names in this category included ICICI Prudential Life Insurance, SBI Life Insurance, Kotak Mahindra Life Insurance, PNB Metlife Insurance, SBI Pension Fund and UTI Retirement Solutions Pension Fund Scheme. Foreign participation included Government of Singapore, Monetary Authority of Singapore, Government Pension Fund Global and BNP Investment LLP.
As per the prospectus, out of the 22.13 crore shares offered for sale, 5.93 crore shares were reserved for anchor investors.
LIC IPO price attractive: Chairman
LIC Chairman MR Kumar has said that LIC IPO pricing is very attractive and investors can look forward to returns in the years to come as the company has potential for growth. More than the embedded value one should look at the value for new business (VNB) going forward, and it should reach 12-13 in the future, he said.
LIC was formed by merging and nationalizing as many as 245 private life insurance companies on September 1, 1956, with an initial capital of Rs 5 crore. Its product portfolio comprises 32 individual products (16 participating products and 16 non-participating products) and seven individual optional rider benefits. The insurer's group product portfolio comprises 11 group products.
As of December 2021, LIC had a market share of 61.6 per cent in terms of premiums or Gross Written Premium (GWP), 61.4 per cent in terms of new business premium, 71.8 per cent in terms of the number of individual policies issued, and 88.8 per cent in terms of the number of group policies issued.