Norway’s Norges Bank Investment Management, Singapore’s GIC Pte, and Abu Dhabi Investment Authority have committed to becoming anchor investors in the LIC IPO. The formal announcement is likely to be made on Monday, according to a Bloomberg report. The initial public offering of Life Insurance Corporation is set to be launched on May 4 and will close on May 9. The IPO subscription window for anchor investors will be opened on May 2.
LIC IPO Date, Price, Quota
The LIC IPO will be open for subscriptions on May 4 and close on May 9, with anchor investors participating on May 2. The price band is set at Rs 902-Rs 949 per equity share. The government is offloading 3.5 per cent of its stake in LIC and expects to raise about Rs 21,000 crore through the initial public offering, which is short of earlier projections of about Rs 60,000 crore.
The size has been significantly reduced in the wake of the Russia-Ukraine war and volatile market conditions across the world.
Retail investors will be eligible to participate in about 35 per cent of the IPO issue size and about 15 per cent will be reserved for non-institutional investors. One-third of the anchor investor portion will be reserved for domestic mutual funds. A significant portion, not exceeding 10 per cent of the public issue, will also be reserved for the policyholders. 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.
Around half of the IPO issue has been fixed for qualified institutional buyers (QIBs). Out of the QIB’s portion, 60 per cent has been earmarked for anchor investors on a discretionary basis.
The state-owned insurance behemoth is valued at Rs 6 lakh crore. It has disclosed its embedded value (EV) at about Rs 5.4 lakh crore. The embedded value is the sum of the current value of future profits and adjusted net asset value. It could be considered similar to book value but adjusted for future provisions and cash flows.
DIPAM Secretary Tuhin Kanta Pandey has said the valuation of Life Insurance Corporation is “fair and attractive” and the government expects significant participation of retail investors in the LIC IPO. “LIC IPO will not crowd out capital and monetary supply in the market. The initial public offering is right-sized, given the constraints in the market. The government has a long commitment to list LIC on the stock exchange and the listing LIC is a long-term strategic vision of the government.”
LIC Shares: Grey Market Premium
The premium on LIC shares in the grey market jumped 80 per cent on Thursday, with the company’s IPO set to open next week. LIC shares commanded a premium of Rs 45 over the higher end of the price band set for the IPO, compared with Rs 25 on April 27, according to IPOWatch, which tracks unofficial prices of upcoming IPOs, also known as the grey market prices. Experts expect the grey market premium to inch higher closer to the launch date.