LIC IPO: Govt's acquisition cost of shares at only Rs 0.16/share

The weighted average price of acquisition of equity shares of the Life Insurance Corporation (LIC) for the government comes out to be only Rs 0.16 per share.

This is certified by chartered accountants Batliboi & Purohit, LIC's statutory auditor for its initial public offering (IPO). The acquisition price is disclosed in the draft red herring prospectus (DRHP) filed by the country's largest insurer with the Securities and Exchange Board of India (SEBI). 

The face value of the shares is Rs 10 per share. 

There was no share capital structure with face value in LIC as on March 2021. The paid-up equity capital of LIC was about Rs 100 crore. This capital was too low for the insurer with large amount of funds. 

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

The entire capital structure has now been changed for the IPO. The cut-off date for changing the capital structure was September 8, 2021, with three sets of capital infusions into LIC. 

The first was allotment of equity shares which was done by converting the then existing paid-up capital of Rs 100 crore into 10 crore equity shares of face value of Rs 10 each. This was the capital infused by the government by actually paying from the exchequer since the inception of LIC. 

On the same day, an additional 62.24 crore equity shares at face value of Rs 10 each were allotted against the free reserves outstanding in LIC's book as on March 31, 2020. 

There was another infusion on the same day, when 560 crore equity shares of face value of Rs 10 each were allotted against the retained share of the Government of India of surplus for fiscals 2020 and 2021.

Currently, the total share capital of LIC stands at 632 crore shares of face value of Rs 10 each. The total share capital is Rs 6,324 crore. 

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