LIC IPO: Fresh DRHP Filed; New Issue Size Approved; Know Launch Date, Price, More Info
Shivani Bhati | Apr 25, 2022 |
LIC IPO: Fresh DRHP Filed; New Issue Size Approved; Know Launch Date, Price, More Info
For the LIC IPO, the government has submitted a new draught red herring prospectus (DRHP) with markets regulator Sebi, and a red herring prospectus (RHP) is expected to be issued in the first half of next week. According to CNBC-TV18, the Securities and Exchange Board of India (Sebi) is anticipated to approve Life Insurance Corporation’s (LIC) amended DRHP on Monday.
The Life Insurance Corporation’s (LIC) initial public offering is set to begin trading in the first week of May, and the company’s board of directors has approved a smaller issue size. The government has chosen to dilute its 3.5 percent interest in the LIC IPO for Rs 21,000 crore, rather than the projected 5 percent in the draught papers.
The government is expected to price the LIC initial public offering at Rs 950-1,000 per share. LIC is estimated to be valued at roughly 1.1X price/embedded value in its initial public offering.
At a board meeting on Saturday, a proposal to cut the IPO’s size from the anticipated 5% to 3.5 percent was tabled and agreed. Here’s what we know thus far regarding the IPO:
Size of the LIC IPO
The government would sell its 5% stake in state-owned LIC through the IPO, according to LIC’s draught red herring prospectus. Now, for Rs 21,000 crore, the stake dilution has been lowered to 3.5 percent, valuing the country’s largest insurer at Rs 6 lakh crore. A greenshoe option of Rs 9,000 crore is also anticipated to be included in the IPO.
An over-allotment option is known as a greenshoe option. The option allows the corporation to keep excess subscriptions and change the public offering based on demand and market conditions.
Date of the LIC IPO
Government sources informed CNBC-TV18 that the initial public offering is expected to go public in the first week of May. The government submitted new draught papers for the initial public offering (IPO) earlier this month. The Centre now has until May 12 to launch the offer, after which it will have to file new documents with the markets regulator Sebi. It must also announce the December quarter’s results and update the embedded value. According to draught papers, the LIC’s embedded value was Rs 5.39 lakh crore on September 30, 2021.
LIC IPO Reserved Quota
Retail investors will be eligible to participate in about 35 per cent of the IPO issue size and about 15 per cent will be reserved for non-institutional investors. Around half of the IPO issue has been fixed for qualified institutional buyers (QIBs). Out of the QIB’s portion, 60 per cent has been earmarked for anchor investors on a discretionary basis.
One-third of the anchor investor portion will be reserved for domestic mutual funds. A significant portion, not exceeding 10 per cent of the public issue, will also be reserved for the policyholders. For employees also, 5 per cent of LIC IPO will be reserved. Both the employees and policyholders will get a chance to book LIC IPO at a discounted rate.
So Far, the Biggest IPO
Even with the lower size of Rs 21,000 crore, the LIC IPO will remain the country’s largest initial public offering. Paytm’s IPO, which will raise Rs 18,300 crore in 2021, is the largest so far, followed by Coal India Ltd’s IPO of Rs 15,500 crore in 2010 and Reliance Power’s IPO of Rs 11,700 crore in 2008.
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