The market and investors are gearing up as the much-anticipated IPO of LIC is but hours away. And why would they not, given that this will be the biggest initial public offer (IPO) to ever hit the markets in the history of India’s stock market?
Add to that the fact that LIC (Life Insurance Corporation of India) has become a household name in the country that has touched the lives of almost every Indian, and will be going public with 2,048 branch offices and 1,559 satellite offices in India that cover 91% of all districts in the country. Now, you get an idea why investors will go berserk once the IPO commences on the morrow.
That’s right, India’s biggest IPO starts from tomorrow and will be valued at nearly ₹21,000 crores, which could put the market capitalization of LIC at ₹6 lakh crores and a face value of ₹10. The price band of the same has been fixed at ₹902 to ₹949 per equity share. Investors can start bidding from a minimum of 15 shares and in multiples after that. You can apply for a minimum of one lot (15 shares) and a maximum of 14 lots as a retail investor.
If you followed our report on the same back in February, then this should not come as a surprise to you. However, the government will not be selling 5% of its stake in the insurance juggernaut (something that had been noticed in its draft red herring prospectus with SEBI), but instead, it will liquidate a stake of 3.5% in the same.
The IPO will remain open for bidding to the general public till May 9.
Today, LIC is almost synonymous with insurance, at least in India, and is the first name that comes to mind when one needs to get insurance for anything. It is thus hardly surprising that it is the largest insurance player in the country with a market share of 66% in new business premium. Additionally, it is the 10th largest global insurance player in terms of total assets managed.
So far, institutional and qualified institutional buyers (QIBs) are already putting their bids (50% of the offer has been earmarked for QIBs), while 15% has been kept aside for non-institutional investors. The remaining 35% goes for sale from tomorrow.
In fact, mutual funds have already put in ₹4000 crores into LIC’s anchor book before the same closed yesterday with 59.2 million shares on offer and 42.1 million units kept for domestic mutual funds. In fact, 99 mutual funds pumped in over ₹ 4,000 crores and bought the shares at ₹949 per share.
Around 15.81 lakh shares have been reserved for employees and around 2.21 crore shares are reserved for policyholders. The same get a discount of ₹45 and ₹60 respectively should they apply for the public issue.