Saturday, May 14, 2022

LIC IPO: Govt files DRHP with SEBI, readies to sell 5% stake

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  • LIC will offload 316.25 million shares (over 31 crore) through the IPO
  • According to the DRHP, up to 10 percent of the LIC IPO issue size would be reserved for policyholders

New Delhi: India’s largest state-run insurer Life Insurance Corporation (LIC) has filed the Draft Red Herring Prospectus (DRHP) with Securities and Exchange Board of India (SEBI) on Sunday and has said that its much-awaited Initial Public Offering (IPO) will constitute 4.99 percent of its post-offer paid-up share capital. Announcing the news in a tweet, Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said, “The DRHP of LIC IPO has been filed today with the SEBI.”

“The IPO is 100% OFS by GOI and no fresh issue of shares by LIC. For filing valuation about 31.6 cr shares are on offer representing 5% equity,” said Pandey on Twitter.

LIC IPO will hit market next month

LIC IPO, which is expected to be the country’s largest public issue, will hit the capital market in March. As per the draft prospectus filed on Sunday, LIC will offload 316.25 million shares (over 31 crore). LIC has said as of September 2021, its assets under management (AUM) stood at Rs 39.6 lakh crore.

LIC has 66 percent market share in new business premiums, with 283 million policies and 1.35 million agents as of 31st March 21, according to the DRHP. The embedded value of LIC as of September 30, 2021, stood at Rs 5,39,686 cr (about Rs 5.4 lakh crore), the DIPAM Secretary said.

10% of LIC IPO issue size to be reserved for policyholders

According to the DRHP, up to 10 percent of the LIC IPO issue size would be reserved for policyholders. “The aggregate of reservations for eligible policyholder(s) shall not exceed 10 percent of the offer size,” the DRHP said. And there’s also an employee quota which has been capped at 5 percent.

Individual, resident Indian policyholders with one or more LIC policies as on the date of DRHP and bid/offer opening date will be eligible to apply under this reserved portion. The maximum bid per policyholder is capped at Rs 2 lakh. Policyholders who fail to update their PAN details by February 28, 2022 will not be eligible for this quota, said the DRHP.

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