Life Insurance Corporation (LIC), an insurance giant, has fixed the price band at ₹902-949 per share for the ₹21,000 crore public offer (IPO) that may open on May 4, news agency PTI reported, citing sources.
Sources told PTI that the LIC would offer a ₹60 discount for policyholders and ₹40 for retail investors and employees. The issue is expected to open for subscription on May 4 and is expected to close on May 9.
The government had in February planned to sell a 5 per cent 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 per cent, PTI added.
What you should know about the LIC IPO:
> The LIC IPO is likely to begin on May 4. If it is delayed for any reason, the LIC has time till May 12 to launch its shares. If it is delayed beyond that the company will have to file fresh papers.
> Subscriptions will be open till May 9.
> The government, which owns the insurance giant, plans to sell a 3.5 per cent stake instead of the five per cent that was listed in the previous Draft Red Herring Prospectus (DRHP), sources told news agency ANI.
> The LIC IPO size was cut due to market conditions. The revised sale percentage was mentioned in a fresh DRHP and approved at a board meeting held on Saturday. The government earlier wanted to sell 31.6 crore shares.
> The company’s embedded value – or measure of consolidated shareholders value in an insurance firm – was estimated at ₹5.4 lakh crore in September. The evaluation was done by international actuarial firm Milliman Advisors.
> The forthcoming LIC IPO has received ₹13,000 crore worth of investment commitments from anchor investors – over twice the value of shares offered to such investors, three people with direct knowledge of the development said.
> That value has been updated based on investor feedback; the market value has been pegged at 1.1 times its embedded value, or ₹6 lakh crore.
> The LIC IPO is expected to provide a major contribution to the government’s disinvestment proceeds in this fiscal, or FY22. The government had pegged disinvestment receipts at ₹65,000 crore – up from ₹13,531 crore raised in the last fiscal.
> 66-year-old Life Insurance Corporation of India dominates the country’s insurance sector with over 280 million policies. It was the fifth-biggest global insurer (in terms of insurance premium collection) in 2020, the latest year for which statistics are available, Reuters reported.
(With inputs from agencies)