The Life Insurance Corporation‘s much-awaited IPO, or initial public offering, is expected to open on May 4, news agency ANI reported Tuesday morning. The Securities and Exchange Board of India, or SEBI, has approved the LIC IPO last month, and a Draft Red Herring Prospectus – which is an offer document filed by a company that wants to raise money from the public by selling its shares to investors – has been filed. The Indian government wanted to list the Life Insurance Corporation in the last financial year – before March 31 – but it was postponed because of poor market conditions following the Russia-Ukraine war.
What you should know about the LIC IPO:
> The LIC IPO is likely to begin May 4. If it is delayed for any reason, 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.
READ: LIC IPO to open on May 4, close on May 9 – Report
> The Government of India, 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 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.
READ: LIC board okays cut in IPO issue size to 3.5 per cent
> 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.
READ: Life Insurance Corporation IPO sees huge interest from anchor investors
> 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 input from ANI, PTI, Reuters