The government is preparing for this LIC IPO. With the listing next month, many developments begin to be seen in the process, between a grim global market outlook and inflation projections. The government is reanalysing all points to attract investors and promise value. The country’s largest insurance company may file a revised draft red herring prospectus (UDRHP) for the LIC IPO after consultations between the Department of Investment and Public Asset Management (DIPAM) and investment bankers.
According to the current DRHP, the government will give 5% stake in the insurance giant through 31.6 crore shares to raise Rs. 63,000 crore. This is going to aid the Centre’s disinvestment target of Rs. 78,000 crore for this fiscal year. Following are the crucial developments that investors should take note of:
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Center is planning on reducing valuation
LIC’s board is meeting this week in order to make a decision on whether to lower the company’s valuation and offer more shares in its initial public offering. This move will make the float more attractive to many of its policyholders who are likely going to invest for the first time. The insurer is planning to reduce its valuation to 30% and offer 7% of its shares to the public, which is an increase from the earlier 5%. The government is now considering a valuation of approximately Rs. 11 lakh crore from the IPO; earlier it was approximately Rs. 16 lakh crore.
Revised IPO Papers in the Works
Sources have said that the LIC board is going to meet later this week in order to “finalize the FY22 results and later file a revised public offer document by the middle of next week”. A government source also stated that the listing “will be completed by May 12”.
The company is going to file the updated document with the Insurance Regulatory and Development Authority of India (IRDAI) once its results are approved by the board. The issue is expected to open towards the end of April after the completion of the roadshow.
LIC IPO date
The government had previously decided to launch the LIC IPO by the financial year of 2022. But, the Russia-Ukraine war and the volatile stock market situation has derailed the IPO timeline. Now, the government is likely Launch LIC IPO Between 25-29th April, sources have said.
LIC IPO reserve part
The government has reserved about 50% of LIC’s IPO for Qualified Institutional Buyers (QIBs). For non-institutional investors (NIIs) the share is going to be about 15%. The retail quota for LIC’s IPO has been set at 35% of the offer. One-third of the anchor investor is going to be reserved for domestic mutual funds.
A significant part is also going to be reserved for policyholders and must not be more than 10% of the public issue. For employees, 5% of LIC’s IPO is going to be reserved. Both employees and policyholders are going to get an opportunity to book LIC IPO at a discounted rate.
LIC IPO Anchor Investor Final
The Center has finalized 50-60 anchor investors, which include BlackRock, Sands Capital, Fidelity Investments, Standard Life and JP Morgan, and will conclude its anchor book soon.
According to the sources, the IPO has gathered a lot of interest from local and foreign investors. At least 12 top fund managers are committing to getting in around Rs. 18,000 crore as anchor investors.
LIC Public Issue is going to be the biggest IPO in the history of India’s stock market. Once it is listed, LIC’s market valuation will be up there with top companies like Reliance Industries Limited and Tata Consultancy Services.
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