Life Insurance Corporation of India (LIC) on Wednesday, 27 April, announced that it has fixed the price band for its upcoming Rs 21,000 crore mega Initial Public Offering (IPO) at Rs 902-949 per share.
The issue opens on 4 May and will close on 9 May.
Despite its reduced offering size, the issue will be the biggest in India, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said on Wednesday.
The anchor quota meanwhile will open on 2 May. The issue size is Rs 20,557 crores, amounting to a 3.5 percent dilution.
10 percent of the offer size has been reserved for policyholders and 0.7 percent for employees. Additionally, LIC will offer a discount of Rs 60 for all policyholders and of Rs 40 for employees and retail investors.
'A Great Indian Story'
LIC IPO is right sized, given the constraints in the market, Pandey said, addressing a press conference.
The IPO will not crowd out capital and monetary supply in the market, Pandey further added.
"This IPO was considered unthinkable for a long, long time. LIC was always an investor. And today, LIC is coming before investors to get invested in. It's a great Indian story," Pandey said.
Pandey further added that the government had a strong commitment to disinvest LIC, and said that its listing will be high value enhancing in the long term.
Speaking at the press conference, LIC Chairman MR Kumar said that the company had struggled in the first two decades to sell insurance in India.
"Then it gathered momentum in the 70s and 80s. That was LIC 1.0. Then it adapted to competition, which was LIC 2.0. And now this is LIC 3.0," he went on to say.
IPO Plans Affected by Ukraine War
In February, the government had planned on selling a five percent stake or 31.6 crore shares of LIC and filed draft papers with market regulator Securities and Exchange Board of India (SEBI).
However, the IPO plans were affected due to the ongoing market volatility amid the war between Russia and Ukraine.
Consequently, LIC now wants to sell 221 million equity shares, instead of the 31.6 crore and the issue size has been lowered to 3.5 percent of equity, instead of the 5 percent planned earlier.
Meanwhile, at Rs 6 trillion, LIC's valuation ahead of its IPO has also been cut down by nearly half of that mentioned by the government in FY22 Budget.
However, reacting to a question about the reduction in valuation on Wednesday, Pandey said, "Its not correct to say that 3 months back, this was, 2 months back, this was. These are all guesstimates and people are speculating, not authoritative, government sources."
“Valuation process is more of a discovery process for LIC,” Pandey said.
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