Things to know about LIC IPO

February 19, 2022 Finance Talk Valli Sarvani No comments

Life Insurance Corporation of India (LIC), the largest insurance company in the country, will be going public soon.

The LIC IPO is likely to open on March 10 and continue till March 14 as per sources. It will be the biggest ever public offering with more than 31.6 crore shares.

Here are some important points to know about LIC IPO:

LIC IPO is an offer for sale (OFS) by the Government of India for the face value of ₹10. The government wants to sell a 5 per cent stake and raise an amount of ₹65,000 crores.

Policyholders and employees of LIC will have a quota of 10% and 5% reserved in the IPO. They will get a discount of up to 10% on the floor price. Employees will have a separate quota of 1.58 crore shares.

Policyholders will have a reservation of 3.16 crore shares. However, group policies are not eligible. Spouses of deceased policyholders receiving annuity and nominees are also not eligible for this.

To qualify for the LIC policyholder category, the policy should have been purchased on or before 13th February 2022. The PAN of the policyholder must have been linked to their LIC policy on or before 28th February 2022.

Those who want to link their PAN can visit the website of LIC and proceed as per directions.

Qualified institutional buyers (QIB) will have a 50 per cent reservation in the IPO. The LIC will reserve 35 per cent to retail investors and 15 per cent to non-institutional investors (NII).

The Government of India appointed 10 merchant banks to manage the IPO. Some of them are Kotak Mahindra Capital, Nomura Financial Advisory and Securities (India) Pvt Ltd., and Goldman Sachs (India) Securities Pvt Ltd.

The embedded value of LIC was ₹5.4 lakh crores in September 2021. The Draft Red Herring Prospectus (DRHP) does not disclose the market valuation of LIC. But, it may be over 3 times the embedded value. That means nearly ₹16 lakh crores.

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