LIC IPO: Life Insurance Corporation of India (LIC) has filed an updated DRHP for LIC IPO with SEBI. Updated DRHP for LIC IPO is based on December financials of LIC, govt official told CNBC-TV18. On March 11, 2022, the state-run insurer LIC said its fiscal third-quarter profit after tax jumped to Rs 234.91 crores, from a mere Rs 0.91 crore in the same quarter in the previous year, primarily due to a change in funds redistribution policy.
On February 13, the government filed the draft red herring prospectus (DRHP) for the IPO with Sebi, which granted its approval for the same last week. The government will sell about 31.6 crore shares or a 5 per cent stake in the insurance behemoth, which is estimated to fetch around Rs 60,000 crore to the exchequer. The public issue was originally planned to be launched in March, but the Russia-Ukraine crisis has derailed the plans.
LIC IPO: Details on Price Band, Discount Rate
This will provide details about the price band, discount for policyholders and retail buyers, and the actual number of shares to be put on the block, an official said told PTI.
“We have got the approval of the DRHP and the next step would be to file the RHP, which will give details of the price band and the actual number of shares. We are watching the situation, and soon we will take a call on the timing of the share sale,” an official told the news agency.
LIC IPO: Reserved Portions
The issue is likely to have reservations for eligible employees and LIC policyholders of the company, according to the DRHP. One-third of the anchor portion will be reserved for domestic mutual funds.
The issue would be an offer for sale of 31,62,49,885 equity shares by the government, which holds a 100 per cent stake in the insurance behemoth. A total of 50 per cent of the net issue would be reserved for qualified institutional buyers (QIBs), whereas non-institutional buyers will have 15 per cent of shares allocated for them. The retail portion has been fixed at 35 per cent of the offer.
LIC IPO: Embedded Value
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. Although the DRHP does not disclose the market valuation of LIC, as per industry standards it would be about 3 times the embedded value.
At a 5 per cent stake sale, the LIC IPO would be the biggest ever in the history of the Indian stock market, and once listed LIC’s market valuation would be comparable to top companies like RIL and TCS. 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.
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