Center says the size is to be reduced given the current environment and expects around 21,000 Cr.
Center says the size is to be reduced given the current environment and expects around 21,000 Cr.
The center said on Wednesday it had reduced the size of Life Insurance Corporation of India’s (LIC) initial public offering (IPO) given the current “volatile market environment”.
Despite the “right sizing,” LIC’s IPO, which would start on May 4, would be India’s largest yet, Tuhin Kanta Pandey, secretary of the Ministry of Investments and Public Wealth Management, told reporters at a news conference in Mumbai. The share sale, which is expected to help raise around 21,000 crore for the government, would close on May 9. The anchor investors’ share would open on May 2nd.
The government has set the price range at ₹902 to ₹949 per LIC share. While policyholders would receive a rebate of ₹60 per share, eligible employees and individual investors would receive a rebate of ₹45 per share.
Mr Pandey said the government had decided to dilute the 3.5% stake in LIC from the previous plan of 5% given the current (volatile) environment. He added that the government has no plans to present a follow-up public bid next year. SEBI granted an exemption that allowed for a reduction in the scope of the LIC IPO, he clarified.
He said the decision to list LIC was made considering factors such as market demand, reduced market volatility, domestic capital flows and LIC’s performance.
“LIC’s IPO will not crowd out the capital and cash supply,” Mr Pandey said, adding that the government would like significant retail involvement in LIC’s IPO.
“The government is determined to add LIC to the list. This is a first step towards long-term value creation,” he said. “The government really hopes that LIC management and investors will pull it off,” he added.
Investors can bid for a minimum of 15 shares and thereafter for multiples of 15 shares.
The IPO will be made through an offer to sell up to 22.13.74.920 shares by the President of India acting through the Treasury Department of the Government of India.
LIC, India’s largest life insurer, had a market share of 61.6% in terms of premiums or GWP, 61.4% in terms of New Business Premium (or NBP), 71.8% in terms of number of individual policies issued and 88 .8% in terms of the number of group policies issued for the nine months ended December 31, 2021.
