The Centre said on Wednesday it had reduced the size of the Life Insurance Corporation of India (LIC) Initial Public Offering (IPO) in light of the current ‘volatile market’ environment.
Despite the “right sizing”, the LIC IPO, which would open on May 4, would be India’s biggest ever, Tuhin Kanta Pandey, Secretary, Department of Investment & Public Asset Management told reporters at a press conference in Mumbai. The share sale, which is expected to help raise about ₹21,000 crore for the government, would close on May 9. The anchor investor portion would open on May 2.
The Government has fixed the price band at ₹902 to ₹949 per equity share of LIC. While policy holders would get a discount of ₹60 per share, eligible employees, and retail investors would get a discount of ₹45 per share.
Mr. Pandey said the government decided to dilute 3.5% stake in LIC, from the earlier plan of 5%, considering the current (volatile) environment. He added that the government had no plans to come out with a follow-on public offer in the next one year. SEBI had given an exemption, allowing a reduction in the size of the LIC IPO, he clarified.
He said the decision to list LIC was taken considering factors like market demand, reduced market volatility, domestic fund flows and LIC’s performance.
“LIC IPO will not crowd out capital, monetary supply,” Mr. Pandey said, adding the government wants significant retail participation in the LIC IPO.
“The Government has strong commitment to list LIC. This is a first step for long term value creation,” he said. “The government really hopes that the LIC management and investors will pull it (the IPO) through,” he added.
Investors can bid for a minimum of 15 equity shares and in multiples of 15 shares thereafter.
The IPO is through an offer-for-sale of up to 22,13,74,920 equity shares by the President of India, acting through the Ministry of Finance, 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 number of group policies issued, for the nine months ended December 31, 2021.
