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LIC IPO: State insurer valued at Rs 6.07 lakh crore, to raise Rs 21,000 crore via public offer

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LIC IPO: State insurer valued at Rs 6.07 lakh crore, to raise Rs 21,000 crore via public offer

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The IPO, through which the government will sell a 3.5 percent stake in LIC will fetch Rs 21,257 crore to the exchequer, valuing LIC at Rs 6.07 lakh crore. The government currently holds a 100 percent stake in LIC.

The initial public offering (IPO) of state-run insurance behemoth Life Insurance Corporation (LIC) will open for subscription on Wednesday, May 4, 2022.
The IPO, through which the government will sell a 3.5 percent stake in LIC will fetch Rs 21,257 crore to the exchequer, valuing the insurer at Rs 6.07 lakh crore. The IPO is expected to value LIC at around 1.12X price/ embedded value. The government currently holds a 100 percent stake in LIC.
The Rs 21,257 crore LIC IPO will be available for subscription till Monday, May 9, 2022, and the price band of the state insurer has been fixed at Rs 902-949 per share.
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The state insurer will allocate 60 percent of the qualified institutional buyers (QIBs) portion in the initial public offering to anchor investors, 50 percent to qualified institutional buyers (QIBs), 35 percent to retail, and 15 percent to non-institutional investors (NIIs).
Also, 10 percent of the issue (2.21 crore shares) will be reserved for policyholders and 0.15 crore shares have been reserved for eligible employees.
Investors who wish to subscribe to LIC IPO can bid in a lot of 15 equity shares. The discount for retail and employees will be Rs 45 and the discount for policyholders will be Rs 60.
The government had in February planned to sell a 5 percent stake or 31.6 crore shares of the insurance behemoth and had filed draft papers with Sebi. However, the IPO plans faced headwinds due to the ongoing market volatility amid the Russia-Ukraine war. Last week, the government decided to lower the issue size to 3.5 percent.
At 3.5 percent stake dilution, the LIC IPO would be the biggest ever in the history of the Indian stock market. 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.
LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal year. The government has pegged disinvestment receipts at Rs 65,000 crore for 2022-23, up from Rs 13,531 crore last fiscal year.
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