India's largest IPO of LIC opens on May 4 to raise close to Rs 21,000 crore
- EP News Service
- Apr 27, 2022
MUMBAI: The initial public issue (IPO) of state-owned Life Insurance Corporation (LIC) was launched today to open on May 4, and at the top end of the price band of Rs 902 to 949 it will raise about Rs 21,000 crore.
Although LIC will be raising much less than the earlier projection of about Rs 60,000 crore from the IPO, it will still be the largest ever in India leaving behind fintech firm Paytm's IPO of Rs 18,300 crore in November 2021.
Launching the IPO, Tuhin Kanta Pandey, Secretary of the Department of Investment and Public Asset Management (DIPAM) which deals with the disinvestment of equity in central Public Sector Undertakings (PSUs) said that the government will be offloading a 3.5 per cent stake or 22.13 crore shares in the company in the IPO.
Pandey said, "The share sale is part of the government's long-term strategic vision and will enhance the value of LIC in the long run," he also added, "LIC IPO is right-sized, given the constraints in the market and will not crowd out capital and monetary supply in the market.”
When the plan of LIC's disinvestment was drawn it was initially decided by the government was to offload about 5% of LIC through the share sale, however, adverse conditions resulted due to the Russian invasion of Ukraine on 24 February and adverse market conditions it was decided to pare the valuation of the IPO.
Pandey, however, brushed aside such contentions saying that the valuation process is essentially a discovery process and all that is being said about predicted valuations was only speculation.
"It would not be fair to comment on the valuation process as we do not exactly know what we are comparing. We have worked out a valuation after extensive feedback and through an iterative process, which I would say is a fair and attractive valuation," Pandey said.
Investors can bid for shares in a lot size of 15 shares, and multiples thereof. There is an employee reservation of 15.81 lakh shares while 2.21 crore shares are reserved for policyholders. Retail and employees will get a Rs 45 discount, while policyholders will get Rs 60 discount.
The allotment of shares to successful bidders will happen on May 12, and the refund to unsuccessful bidders will be credited on the same day. Shares will be credited to the Demat account by May 16 and the stock is likely to start trading in the secondary market from May 17 onwards.
The LIC IPO which opens for subscription on Wednesday, 4 May will close on Monday, 9 May.
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