LIC IPO To Open On May 4, Discount To Policy Holders And Price Band: All You Need To Know

The most awaited and the country’s biggest IPO (Initial Public Offering) of India’s biggest life insurer Life Insurance Corporation (LIC), is finally set to hit the market on May 2 for anchor investors and on May 4 for the general public, the insurance major officially confirmed it through an announcement on Wednesday. The IPO will reportedly close on May 9.

As the LIC IPO is the part of Government of India’s (GOI) disinvestment plan from the life insurer, GOI has set the price band at Rs 902-949 with an aim to raise Rs 20,558 crore keeping the approx. valuation at 6 lakh crore by offering 3.5 percent of its stake in LIC.

Reports suggest that the insurance behemoth's valuation will make it the country's 5th most-valued listed firm and its global rank could be 186th. GOI will also be offering a discount of Rs 60 to policyholders and a discount of Rs 45 to retail investors and employees of the state-owned insurance company.

As reports suggest, the IPO earlier was decided at 5 percent which currently has been cut down to 3.5 percent by the LIC board. The IPO was earlier supposed to hit the market in March, however, it differed due to the prevailing geopolitical issues and their impact on global markets.

Apart from policyholders and shareholders, 50 percent of shares will be allotted to qualified institutional buyers (QIBs), 35 percent to retail buyers, and 15 percent to non-institutional investors. Also, out of 50 percent of shares that are going for QIB allocation, 60 percent are going to be reserved for anchor investors. Also, there will be no Green Shoe option in the LIC IPO.

LIC in its filing with the Securities and Exchange Board of India (SEBI) on February 13, had mentioned the objectives of the offerings stating, 

The objects of the Offer are to (i) achieve the benefits of listing the Equity Shares on the Stock Exchanges; and (ii) carry out the Offer for Sale of up to 316,249,885 Equity Shares by the Selling Shareholder.

Mentioning its strength in the filing the insurance major had listed brand name, sole leadership as a public player in the market, product portfolio, and no loan default in it. Further, it had named SBI Life Insurance, HDFC Standard Life Insurance, and ICICI Prudential Life Insurance as competitors.