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LIC IPO size to be reduced to 3.5%, board approves

After much wait, LIC IPO is likely to hit the market in the first week of May. The government is set to file the red herring prospectus (RHP) for the issue this week. The document would include details like the revised issue size, launch dates, issue price and the discount that the government intends to offer its policyholders and employees.

ET Now Digital

Updated Apr 23, 2022, 21:25 IST

LIC IPO size to be reduced to 3.5, board approves

New Delhi: The latest development concerning the much-awaited initial public offering of India's insurance behemoth Life Insurance Corporation of India (LIC) is the reduction in its issue size. The LIC board on Saturday gave its nod to cut down the issue size to 3.5 per cent from 5 per cent.

This means that the government will dilute only 3.5 per cent of its shares worth Rs 21,000 crore as compared to 5 per cent shares announced earlier. However, the decision is subject to regulatory approval, according to an official quoted by Business Standard.

A proposal in this regard was presented before the board today.

The reduction in the issue size now puts India’s largest insurer’s valuation at Rs 6 trillion, which has been finalised after taking feedback from investors. The latest valuation has been fixed at 1.1 times LIC’s embedded value of Rs 5.39 trillion.

This would need Securities and Exchange Board of India’s permission as the market regulator states that companies having a valuation over Rs 1 trillion have to dilute 5 per cent equity and Rs 5,000 worth shares.

Meanwhile, in the draft papers filed with Sebi, the Centre had mentioned selling 5 per cent of its shares in the LIC which translates to 316 million shares.

LIC IPO date

After much wait, LIC IPO will likely hit the market in the first week of May. The government is set to file the red herring prospectus (RHP) for the issue this week. The document would include details like the revised issue size, launch dates, issue price and the discount that the government intends to offer its policyholders and employees.

The 66-year-old company dominates India's insurance sector with more than 280 million policies. It was the fifth-biggest global insurer in terms of insurance premium collection in 2020, the latest year for which statistics are available.

It is also the country's largest domestic institutional investor and investors have been concerned that LIC's investment decisions, including those in loss-making state companies, could be influenced by government demands. The government has time till May 12 to launch the IPO without filing fresh papers.

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