Everything you need to know about India's Largest Public offering: LIC

The largest-ever initial public offering by the Life Insurance Corporation of India has finally taken place. On Wednesday, the government filed a revised draught red herring prospectus (DRHP) with the Securities and Exchange Board of India, ending months of speculation.The day appears to be approaching quickly. According to recent media reports, the date of the LIC IPO has been set for May 4. The LIC IPO is expected to begin on May 4 and end on May 9. The reports appear to have alleviated some of the investors' concerns, who had been anticipating the LIC IPO for quite some time, here are the most anticipated key details on LIC's much-anticipated public offering.

Sources:TOI

A Brief Walk-Around on the Key Details

The much-anticipated IPO will go on sale on May 4 and will close on May 9. Anchor investors, on the other hand, have an advantage here because the IPO will be open to them on May 2. The price range has been set at Rs 902-949 per share. The government will earn approximately Rs 21,000 crore in this upper band. The government has reduced the size of the IPO in the revised DRHP from Rs 60,000 crore to Rs 20,557 crore. Even at this price, LIC's IPO will be the largest ever witnessed by Indian financial markets.This means that instead of offering 5 per cent of the shares for the IPO, as was decided earlier, the government will sell 3.5 per cent stake. LIC will offer 22.13 crore shares for sale at a face value is Rs 10 per share. While, the floor price is 90.2 times the face value of equity shares.

Sources:TOI

Further, the cap price is 94.9 times the face value, the insurance behemoth said in its DRHP filed with Sebi. About 0.025 per cent of the issue, that is 15.81 lakh shares will be reserved for employees of LIC, while 0.35 per cent or 2.21 crore shares have been reserved for eligible policyholders. In addition, half of the shares are reserved for qualified institutional buyers (QIBs), while 15 per cent are for non-institutional investors. India are not eligible to apply for the Policyholder Reservation Portion. The government will sell 3.5 per cent stake in LIC or 22.13 crore of the portion reserved for QIBs, 60 per cent is reserved for anchor investors. Eligible policyholders of LIC will receive a discount of Rs 60 on the issue price, while employees and retail investors will get a discount if Rs 45. One lot of IPO will comprise 15 shares, so investors will need to choose accordingly. They can bid for a lot size of 15 or in its multiples thereof. Successful bidders will be allotted shares on May 12, while unsuccessful bidders will receive refund on the same day. Besides, LIC has received in-principal approval for listing of shares from both BSE and NSE, the prospectus said. Finally, shares of LIC will make their debut on the bourses on May 17.

The entire net proceeds of the issue will be paid to the President of India and LIC will not receive any proceeds of the offer, the company said.

The pre-offer equity shareholding of the promoter is 100 per cent, and upon completion of the offer the promoter will a certain percentage of the outstanding equity shares, which will allow the promoter to continue to exercise significant influence.

As a result, the government will continue to exercise significant influence over LIC's business and all matters requiring shareholder’s approval, including proposed 5-year plans, revenue budgets, transactions with the government and other controlled entities, among other operations.

Sources: TOI

What LIC chairman said

LIC chairman MR Kumar says  that some of the companies in which the insurance company invests will act as domestic investors in the IPO. He stated that while foreign institutional investors (FIIs) are concerned about the IPO, global pension funds are "interested" in it. "There is no doubt that FIIs are concerned, but long-only funds (pension funds) are not concerned because they know they are putting money in for the long haul," Kumar said. LIC has just taken the first step toward its much-anticipated initial public offering (IPO) which will  benefit to investors, markets, policyholders,

Earlier in the day, Tuhin Kanta Pandey, secretary at the department of investment and public asset management, said the LIC IPO was being brought to market in May due to strong demand and a "solid" anchor investor base. Pandey had also said the size of the LIC IPO is "optimal" in current market conditions, defending its move to cut the stake sale plan from 5 per cent.

About LIC

Sources:TOI

On September 1, 1956, the LIC was formed by merging and nationalising 245 private life insurance companies in India. It began with a Rs 5 crore capital. As of December 31, 2021, LIC is the world's fifth largest life insurer and the country's largest asset manager.

Sources:TOI

It covers nearly 91% of all districts in India and has the largest individual agency network among Indian life insurance entities, with approximately 1.33 million individual agents.

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