LIC IPO: The much-awaited initial public offering (IPO) of the Life Insurance Corporation of India is set to be the biggest ever in India, the Reserve Bank of India said in its March Bulletin. “The LIC IPO is set to be the biggest IPO ever in India, and hence, correct timing of the IPO is crucial,” the writers said in their article on the State of the Economy in the March edition of the bulletin, published by the RBI’s Department of Economic and Policy Research on March 17. “With 35 percent of the issue size reserved for retail investors, their response is critical for the success of the LIC IPO.” However, as the stock markets faced headwinds amid uncertainties around the Russia-Ukraine conflict, the Centre decided to put on hold its LIC IPO decision for some time.
LIC IPO Timing Crucial
The insurance giant filed its paper with the Sebi on February 13, which indicated an OFS of up to 3,16,249,885 equity shares worth 5 per cent stake. The RBI opined that LIC going public presents a fresh opportunity to deepen the equity markets’ reach further. The RBI said, “The LIC IPO is set to be the biggest IPO ever in India, and hence, correct timing of the IPO is crucial.”
Not just for retail investors, but the deepening of capital markets is also vital for divestment plans of the government, the RBI stated adding that it is important to inculcate investors’ trust in key market infrastructure institutions.
The earlier plan to list the country’s biggest insurer was before the end of the current financial year. The government has time till May 12 to launch the initial public offering without filing fresh papers with regulator Sebi, according to sources.
Discounts for Policyholders and Retail Buyers, Price Band Details
According to a PTI report last week, the government is planning to file final papers for the LIC’s Initial Public Offering (IPO) with market regulator the Securities and Exchange Board of India (Sebi). The final papers will offer details about discounts for policyholders and retail buyers, price band, and a total number of shares, the report said. 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.
At a 5 per cent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market and once listed, its 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.
As per the draft prospectus, 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.
Kotak Mahindra Capital Company, Axis Capital, BofA Securities, Citigroup Global Markets, Nomura Financial Advisory, Goldman Sachs (India) Securities, ICICI Securities, JM Financial, JP Morgan India Private Limited, and SBI Capital Markets are the book-running lead managers for the issue. On the other hand, KFin Technologies Private Limited is the registrar to the offer.
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