Insurance giant LIC has fixed the price band at Rs 902-949 per share for the Rs 21,000 crore public offer that is likely to open on May 4, sources said.
Life Insurance Corporation (LIC) would offer a Rs 60 discount for policyholders and Rs 40 for retail investors and employees. The issue is likely to open for subscription on May 4 and is expected to close on May 9, and the bid lot would be 15. Anchor investors can subscribe to the shares of the insurance company on May 2. With this IPO, the government would offload a 3.5 per cent stake in the insurance behemoth by selling 22.13 crore shares. LIC has reserved 2.21 crore shares or 10 per cent of the issue size for its policyholders while 15 lakh shares for employees, sources said.
After policyholders and share holders' reservations, the remaining shares will be allocated in the ratio of 50 per cent for qualified institutional buyers (QIB), 35 per cent for retail investors and 15 per cent for non-institutional investors. Sources said 60 per cent of the QIB portion has been reserved for anchor investors. The government in February had planned to sell a 5 per cent stake or 31.6 crore shares in the insurance behemoth and had filed draft papers with Sebi. However, the IPO plans faced headwinds from the ongoing market volatility due to the Russia-Ukraine war. Last week, the government decided to lower the issue size to 3.5 per cent. The government has also filed papers with Sebi seeking exemption from the 5 per cent stake sale norm, sources said. According to the Securities and Exchange Board of India (Sebi) norms, companies with a valuation of over Rs 1 lakh crore have to sell a minimum 5 per cent stake in the IPO.
LIC's embedded value, which is a measure of the consolidated shareholders value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors. Based on investor feedback, the market value of government-owned LIC has been pegged at 1.1 times its embedded value or Rs 6 lakh crore. LIC IPO would contribute a major chunk to the budgeted disinvestment proceeds in the current fiscal. The government has pegged disinvestment receipts at Rs 65,000 crore for the current financial year, up from Rs 13,531 crore raised in the last fiscal.