The initial public offering (IPO) of Life Insurance Corporation (LIC) of India is the most one of the year. The LIC IPO, which was supposed to be launched in FY22 is now expected to be launched by May 2022. A decision on the date of LIC IPO is expected to be taken by the end of this week, as per media reports.
The IPO has been deferred due to high volatility and unfavourable market conditions amid the Russia-Ukraine crisis.
As per the papers filed with Sebi, the issue is a 100 percent offer for sale for around 31.6 crore shares or a 5 percent stake of the firm. No fresh shares will be issued for the IPO. The DHRP, however, does not indicate the offer size of the IPO.
One can apply for the shares of LIC as a retail investor or a policyholder. However, there is a reservation for policyholders
Let's take a look at five things policyholders must know before applying for the LIC IPO.
1. LIC had asked all its policyholders to link their PAN cards by February 28 this year to become eligible for participating in its upcoming public issue.
2. All policyholders who have not exited LIC's records by way of surrender, maturity or by way of death are eligible to take part in the share sale.
3. LIC has reserved 10 percent of the issue size for its policyholders. Employees of the firm will also have a quota of 5 percent of the issue size.
4. Policyholders who will apply under the 'Policyholder Reservation Portion' can bid through the Applications Supported by Blocked Amount (ASBA) and the UPI route. An eligible policyholder can be allocated a maximum of share worth ₹2 lakh after a discount.
5. There is no lock-in period and policyholders are free to sell the shares on listing day if they want to do so.
On February 13 this year, the government filed the draft red herring prospectus (DRHP) with the regulator. The government will have to file fresh papers with SEBI after May 12 in case the IPO does not hit the market by that time. LIC has over 28 crore policyholders and life funds of worth ₹34.3 lakh crore.
According to Angel Broking, LIC is expected to be valued at around ₹13-15 lakh crore, with the insurance behemoth raising about ₹70,000 crore- ₹1,00,000 crore from its initial stake sale. LIC is one of the largest corporations in India, so its IPO launch would be the largest public offering ever in the history of the Indian financial markets.
Life Insurance Corporation of India is a statutory insurance and investment corporation, incorporated in 1956 and headquartered in Mumbai. It is a government-owned company in India. Since its incorporation, LIC has been selling and soliciting life insurance and is the largest life insurer in India.
It has a market share of 66.2 percent in New Business Premium, 74.6 percent in the number of individual policies issued and 81.1 percent in the number of the group policies issued. The AUM of LIC also increased from ₹16.8 lakh crore in FY20 to ₹36.7 lakh crore in FY21 on a standalone basis.