The government has set the price band for the initial public offering (IPO) of Life Insurance Corporation of India (LIC) at ₹902-949 per share and may offer a discount of ₹60 to the policyholders, a report by Business Standard stated. Retail investors and the employees of LIC, on the other hand, may get a discount of ₹45 on subscribing to the shares of India’s largest insurer, a senior government official told the business daily.
The board of LIC has approved the discount to be offered to the three categories, reservations for policyholders and employees, and the issue dates, the report added.
The government is likely to sell 22.13 crore shares, or a 3.5 percent stake, in LIC through the offering, which would help the government garner ₹21,000 crore, valuing the insurer at ₹6 lakh crore. The Securities and Exchange Board of India has approved the reduction in the issue size, the report added.
An exemption on lowering the issue size was required from the market regulator as the existing guidelines mandate a minimum offering of 5 percent equity and ₹5,000 crore worth of shares for companies valued over ₹1 lakh crore.
“All regulatory approvals for LIC’s IPO are now in place,” the official told BS.
About 10 percent of the issue size, or 2.21 crore shares, may be reserved for LIC policyholders, while 15 lakh shares would be reserved for its employees, the official said. After considering the reservations, the remaining 50 percent shares would be allocated to qualified institutional buyers (QIBs), 35 percent to retail investors, and 15 percent to non-institutional bidders.
About 60 percent of the QIB quota has been reserved for anchor investors, the official noted.
“Policyholders have played an important role in LIC’s journey and growth. The unanimous view, within the government, was to offer them a higher discount as a reward, for availing the issue,” the official said.
"There are about 10.8 million policyholders of LIC who have linked their policies with PAN and have a Demat account. The government is hoping most of these eligible policyholders would avail the reserved quota in the IPO," the official further informed BS.
The IPO would open on May 2 for anchor investors, and on May 4 to May 9 for the public. The red herring prospectus (RHP) for the issue would be filed on Tuesday night, or latest by Wednesday morning, the official added. LIC is set to formally announce the details of the IPO on Wednesday, the BS report said.