The price band of the much-awaited Initial Public Offering of Life Insurance Corporation of India (LIC) will be between 902 and 949, with 60 discount for policyholders and 45 discount for employees.
According to officials aware of the decision taken during a high-level meeting on Tuesday, the government will sell 3.5% stake through 22.13 crore shares, where 2.2 crore shares will be reserved for policyholders and 0.15 crore shares for employees.
IPO Open on May 2 for anchors and other investors from May 4 to May 9.
“After the reservation, the remaining shares are to be allotted to the eligible in the ratio of 50%” institutional buyer35% to retail investors and 15% to non-institutional investors,” the official said, asking not to be named. “60% of the QIBs are reserved for anchor investors,” he said.
Mint reported on Tuesday that the IPO was received Investment commitments of Rs 13,000 crore from anchor investors, more than twice the value of the shares offered to such investors.
The government’s stake sale in India’s largest insurance company is still much lower than the at least 5% stake sale it had originally planned. Geopolitical tensions, rising oil prices and monetary tightening by major central banks have left global investors worried about emerging market stocks, easing demand for LIC shares.
Declining investor demand after Russia’s invasion of Ukraine has also weighed down valuations.
The government has decided to sell no more than 3.5% stake for at least one year from the date of listing, which will give the stock enough time to recover its market determined price post listing.
Although the commitments of anchor investors are almost equal 13,000 crore, the final allocation to anchor investors will be approx. The government has increased the issue size to a little over Rs 6,300 crore. 21,000 crores.
Anchor investors who do not get enough shares during the anchor allotment can separately buy more shares of LIC from the quota of qualified institutional buyers, who will offer shares of lesser value. 10,500 crores.
LIC’s IPO will be the first in the country to offer only 3.5% stake to the public, which is less than the 5% regulatory minimum set by the Securities and Exchange Board of India (SEBI).
What is the value of LIC 6 trillion, which is just 1.1 times its original embedded value 5.39 trillion, as per the revised estimates of the government.
Since the government will be selling a 3.5% stake in LIC during the IPO, the insurer may be exempted from complying with a SEBI rule that requires publicly traded companies to acquire a minimum public stake of 25% in five years. is required.
The government and SEBI are currently discussing ways to relax norms on minimum public shareholding for LIC, and as per current discussions, more than five years as a special exemption for LIC to achieve the minimum public shareholding target. can be given,
On April 13, Mint reported for the first time that the government had deducted valuation This is seeking to make the initial share sale attractive for LIC.
Mint reported last week that the country’s largest insurer reported a stellar performance with first-year premium collections, a key metric, rising 7.9%. 1.98 trillion for the year ended March 31.
LIC sold 21.7 million insurance policies in the year ended March 31, an increase of 3.54% over the previous financial year, increasing its market share in terms of policies sold to 74.6%.