LIC’s Rs.21K crore IPO, India\'s largest, to open on May 4

Mumbai: State-run insurance behemoth Life Insurance Corporation of India’s (LIC) initial public offer (IPO) at Rs 21,000 crores will be India’s largest IPO so far, even after the Central government brought down the stake sale on offer to 3.5 per cent from the earlier 5 per cent. The price band is set at Rs 902 to Rs 949 per equity share.

Though there is an extremely high demand for the LIC shares, the government has roped in anchor investors — the first-time ever for an IPO of a state-run company. The shares will be allotted to anchor investors on May 2.

Around 6.48 crore policyholders of the state-run insurance behemoth have updated their PAN to participate in it’s the upcoming Rs 21,000-crore mega IPO that opens for subscription on May 4 and closes on May 9.

The company has decided to reserve 10 per cent of shares on the offer for its policyholders under the policyholder reservation portion.

The policyholders will get a discount of Rs 60 per share, while the employees and retail investors will be entitled to a lower discount of Rs 45.

Speaking to this newspaper, M.R. Kumar the chairman of LIC said, “Around 6.48 crore policyholders have updated their PAN but we don’t know if they all have a demat account.” The last date for linking policy with PAN was February 28.

“There is enough demand and we have a strong anchor book line up,” said Tuhin Kanta Pandey, secretary, Department of Investment and Public Asset Management ((DIPAM), addressing concerns raised about the recent exit of foreign investors from the Indian equity market.

Addressing concerns about a hurried listing in tough market conditions and reduction of issue size from 5 per cent to 3.5 per cent of total shareholding, Mr Pandey said, “We went ahead because of market demand for LIC IPO, the market has stabilised from earlier peak volatility seen in March, strong domestic inflows and LIC‘s financial performance. We know that even if we have constraints we can pull it off.” He added, “Markets are so integrated now to events worldwide.”

“India is the only market that can afford and offer an issue of this size. No other equity market has seen an issue of this size in the last 3-4 months,” said one of the merchant bankers of LIC.

Out of the 22.13 crore shares that will be offered for sale, the life insurance behemoth will reserve nearly 2.21 crore, or 10 per cent, for policyholders. Another 15.8 lakh shares, or 0.7 per cent, will be part of the employees’ quota.

Bids can be made in multiples of 15 equity shares. The maximum bid amount under policyholder, retail and employee quotas cannot exceed Rs 2 lakh (net of the discount). However, if you are a retail investor, who is a policyholder as well as an employee, you can bid under all categories separately, so the aggregate limit will be Rs 6 lakh.