LIC IPO: Govt to raise Rs 5,627 cr from anchor investors

With the much-awaited LIC IPO finally happening, the insurance behemoth is eying to raise ₹5,627 crore from anchor investors in the upper price band. The anchor investment will be held on May 2, while IPO will be opened for subscription for others from May 4 till May 9. The government will sell a 3.5% stake in the company and expects to garner around Rs 21,000 crore.

Out of a total of 221,374,920 equity shares on offer, the qualified institutional buyers’ portion will get 98,828,089 shares, while non-institutional and retail portions stand at 29,648,427 and 69,179,663, respectively. A total of 1,581,249 shares are kept for employees, while policyholders could reserve 22,137,492 shares.

Tuhin Kanta Pandey, Department of Public Investment and Asset Management (DIPAM) secretary addressing the media today said this could a high-value enhancing event. “The IPO is just the beginning. We want to champion LIC as a long-term value creator in the equity markets."

The insurer will raise ₹2,100 crore from policyholders and ₹150 crore from employees reservation, considering the calculation as per the upper price band. In a big cheer for retail investors and employees, they can buy shares at ₹45 discount, while policyholders will get ₹60 discount on each share.

A total of ₹3,751 crore will be raised from the net QIB portion, including mutual funds and other QIBs. The company will raise ₹2,813 crore from the non-institutional portion and ₹6,565 crore from the retail portion.

With this IPO, LIC will become India's 5th most-valued listed company with a market cap of ₹570,515 crore – ₹600,242 crore, just behind companies like RIL (₹19 lakh crore). TCS (₹13.12 lakh crore), HDFC Bank (₹7.58 lakh crore) and Infosys (₹6.57 lakh crore).

The company will be listed on both the BSE and NSE. After the public issue, the promoter (the government) will hold a 96.5% equity stake in the company, while 3.5% will be held by the public.

Axis Capital, Kotak Mahindra Capital, BofA Securities, Citigroup Global, Goldman Sachs, ICICI Securities, JM Financial, J.P.Morgan, Nomura Financial, and SBI Capital Markets are the book running lead managers of the issue.

State-run LIC is the largest life insurer in India, with a 61.6% market share in terms of premiums and a 61.4% market share in terms of new business premiums. The company commands a 71.8% market share in terms of the number of individual policies issued.

Even with the reduced issue size of ₹21,000 crore, LIC will be the largest IPO in the country, outdoing Paytm's ₹18,300 crore and Coal India’s ₹15,500 crore IPOs.