LIC fixes IPO price band with discount for employees & policyholders

The much-anticipated inaugural share sale of Life Insurance Corp. (LIC) will have a price range of 902 to 949. Policyholders will receive a discount on this price band.

• Despite the reduced amount of the issue, LIC would remain India’s largest IPO after Paytm, which raised roughly Rs 18,300 crore.
• The government had hoped to raise over 60,000 crore via the sale of a 5% stake, but investor demand has dwindled since Russia’s invasion of Ukraine, reducing the issue size to just over 21,000 crore.
• The government will sell 22.13 crore shares to reduce its 3.5 percent holding, with 2.2 crore earmarked for policyholders and 0.15 crore retained for staff.
• LIC is valued at Rs. 6 lakh crore in the IPO. According to previous government estimates, the insurer is worth roughly Rs. 17 lakh crore.
• The sale will begin on May 2 for anchor investors and on May 4 for subscriptions, with a closing date of May 9.
• Employees and policyholders will receive a 45 and 60 percent price band discount, respectively.
• Earlier today, IPO has received investment pledges of Rs 13,000 crore from anchor investors, more than twice the value of shares offered to such investors.
• Companies with a market capitalization of more than Rs 1 lakh crore must sell 5% of their stock in an IPO, according to Sebi regulations. In this case, the markets regulator may grant LIC an exemption.
• The government and Sebi are now considering ways to reduce the minimum public shareholding requirement for LIC, and according to the current discussions, LIC may be allowed a special exemption of more than five years to meet the minimum public shareholding requirement.
• The LIC IPO is expected to provide a significant portion of the disinvestment profits projected for the current fiscal year. The government expects disinvestment receipts to reach 65,000 crore this fiscal year, up from 13,531 crore the previous fiscal.