Life Insurance Corporation of India (LIC) has its draft share sale papers with the markets regulator Securities and Exchange Board of India (SEBI). With this, the state-run insurer is one step closer to becoming the biggest Indian initial public offering (IPO) ever. According to the draft red herring prospectus (DRHP), about 31.6 crore shares are on offer, representing 5 per cent equity of LIC. The face value of the equity shares is Rs 10. The offer has been authorized by the resolution of the LIC Board dated February 11, 2022.
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According to Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey, the IPO is a 100 per cent offer for sale (OFS) by the government and no fresh issue of shares by LIC.
“The Employee Reservation Portion will not exceed 5 per cent of our post-offer Equity Share capital. The Policyholder Reservation Portion shall not exceed 10 per cent of the offer size,” draft prospectus read.
Currently, the government owns a complete stake in LIC. Once listed, it is likely to become the country’s biggest company by market capitalisation.
As per a report by rating agency CRISIL, LIC has been providing life insurance in India for more than 65 years and is the largest life insurer in India, with a 64.1 per cent market share in terms of premium. There are currently 24 life insurance companies in India, with LIC being the sole public player, the report added.
The embedded value of LIC — as on September 30, 2021 — is Rs 5,39,686 crore (around Rs 5.4 lakh crore).
Last month, LIC reported a profit after tax of Rs 1,437 crore for the first half of the financial year 2021-22 as compared with Rs 6.14 crore in the year-ago period.
Till now, the government has raised around Rs 12,000 crore from the privatisation of Air India and stake sale in other state-run units.
LIC’s listing is crucial for the government to meet the lowered revenue estimates of Rs 78,000 crore for the current financial year. The government had an initial target of Rs 1.75 lakh crore from the disinvestment proceeds. The Center aims to come out with the IPO and subsequent listing of LIC on bourses by March.
Kotak Mahindra Capital Company Limited, Axis Capital Limited, BofA Securities India Limited, Citigroup Global Markets India Private Limited, and Nomura Financial Advisory and Securities (India) Private Limited are the lead managers for this much-awaited IPO of LIC.
Also, IDBI Bank is the subsidiary of LIC, following the acquisition of 51 per cent shareholding in IDBI Bank.