LIC IPO on Track: Anchor Investors Promise Rs 18,000; Reduced Valuation, Other Key Details

As the government gears up for the LIC IPO listing over the next month, a host of developments in the process begin to emerge, amid a grim global market outlook and inflation projections. The government is weighing all points to woo investors and promise value. The country’s largest insurer is likely to file an updated draft red herring prospectus (UDRHP) for the LIC IPO after consultations between the Department of Investment and Public Asset Management (DIPAM) and investment bankers and a key meeting of the LIC board, according to media reports.

As per the current DRHP, the government will dilute a 5 per cent stake in the insurance behemoth through 31.6 crore shares to garner Rs 63,000 crore. It would help meet the Centre’s curtailed disinvestment target of Rs 78,000 crore for the current fiscal. Here are the key developments investors should know about.

Centre Plans to Pare Valuation

The LIC board is meeting this week to decide on reducing the valuation of the company and offering more shares in its initial public offer that will make the float more attractive to many of its policyholders who are first-time investors. The insurer plans to reduce its valuation by 30 per cent and offer 7 per cent of its shares to the public against 5 per cent earlier. The government is now looking at a valuation of around Rs 11 lakh crore from the IPO against Rs 16 lakh crore earlier.

Revised IPO Papers in the Works

The LIC board will meet this weekend to “finalise its FY22 results and subsequently file a revised public offer document by the middle of next week”, sources told The Economic Times. A government source also said the listing “would be completed by May 12”.

The company will file the revised documents with the Insurance Regulatory and Development Authority of India (IRDAI) after its results are approved by the board. There are also whiffs of an April-end opening for the issue after roadshows are completed.

LIC IPO Date

The government planned to launch LIC IPO by the financial year 2022. However, the war between Russia and Ukraine and the volatile situation in the stock market, derailed the timeline. On March 1, finance minister Nirmala Sitharaman said, “Ideally, I’d like to go ahead with it because we’d planned it for some time based purely on Indian considerations. But if global considerations warrant that I need to look at it, I wouldn’t mind looking at it again.” “When a private sector promoter takes this call, he has to only explain this to the company’s board. But I would have to explain it to the whole world,” she further added. Now, the government is likely to launch LIC IPO between April 25-29, the sources have said.

LIC IPO Reserved Portions

The government has reserved around 50 per cent of LIC IPO for the Qualified Institutional Buyers (QIB). For Non-Institutional Investors (NII), the portion will be around 15 per cent. The retail quota of LIC IPO has been fixed at 35 per cent of the offer. One-third of the anchor investor portion will be reserved for domestic mutual funds.

A significant portion will also be reserved for the policyholders and it should not exceed 10 per cent of the public issue. For employees also, 5 per cent of LIC IPO will be reserved. Both the employees and policyholders will get a chance to book LIC IPO at a discounted rate.

LIC IPO Anchor Investors Finalised

Centre has shortlisted 50-60 anchor investors, which include BlackRock, Sands Capital, Fidelity Investments, Standard Life, and JP Morgan, and will soon finalise its anchor book.