LIC files DRHP with SEBI for mega IPO; up to 31.62 crore shares on offer

Government-owned insurer Life Insurance Corporation of India (LIC) has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its mega initial public offering (IPO).

The issue, after approval of SEBI, is likely to hit the market in March.

In a tweet, DIPAM Secretary said that the insurer has filed its DRHP with SEBI.

The DRHP of LIC IPO has been filed today with the SEBI. pic.twitter.com/jM9CDBMWVH

— Secretary, DIPAM (@SecyDIPAM) February 13, 2022

As per the DRHP, up to 31,62,49,885 (31.62 crore) equity shares will be on offer through the offer for sale (OFS), representing 5 per cent of equity stake. There will be no fresh issue of shares.

LIC's embedded value stood at Rs 5,39,686 crore as of September 30, 2021.

LIC has 66% market share in New Business Premiums with 283 mn policies and 1.35 mn agents as of 31st March 21.

Embedded value of LIC as on 30th Sep 21 is Rs 5,39,686 cr(about INR 5.4 trillion) pic.twitter.com/WbsjsRkUYB

— Secretary, DIPAM (@SecyDIPAM) February 13, 2022

The employee reservation portion will not exceed 5 per cent of the post-offer equity share capital, while policyholder reservation portion will not exceed 10 per cent of the offer size.

Eligible policyholders may get a discount to the offer price and it will be announced at least two working days prior to the bid/ offer opening date, it said. Up to 60 per cent of QIB portion will be allocated to anchor investors, while one-third of anchor investor portion will be reserved for domestic mutual funds.

LIC's current promoter is the President of India, acting through the Ministry of Finance, Government of India. The promoter currently holds 100 per cent of the pre-offer paid-up equity share capital of the Corporation.

The government has appointed 10 merchant bankers, including Kotak Mahindra Capital, Goldman Sachs (India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd, to manage the mega IPO of the country's largest insurer.

The government is also mulling allowing foreign investors to pick up stake in LIC. As per SEBI rules, foreign portfolio investors (FPI) are permitted to buy shares in a public offer.

FDI policy would have to be tweaked for FII/FPI investment in this IPO, as LIC is a corporation and not an insurance company.

During her Budget speech, Finance Minister Nirmala Sitharaman had announced that LIC's IPO is "expected shortly".

LIC's listing is crucial for the government to meet its lowered revenue estimates of divestment of Rs 78,000 crore for the current fiscal. The government has so far raised about Rs 12,000 crore from privatisation of Air India and stake sale in other PSUs.

The Cabinet Committee on Economic Affairs had in July last year cleared the proposal for LIC's IPO.

Also Read: LIC DRHP: Segregation of Rs 35.39 lakh cr 'Life Fund' listed as risk factor

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