India’s largest insurance company LIC The much-awaited initial public offering (IPO) is expected to be launched by the end of this month. According to a report by Mint, the government is now planning to cut its valuation by 30 per cent to make it more attractive. The Center is now valuing around Rs 11 lakh crore from the IPO, as against Rs 16 lakh crore earlier. Here’s what investors need to know about the upcoming mega IPO:
What will be the size of the IPO?
The government aims to raise around Rs 60,000 crore by selling its 5 per cent stake in the state-run company. However, the Center is also considering increasing its size. LIC IPO, After holding discussions with investment bankers, the government may soon file an updated draft Red Herring Prospectus (DRHP) with markets regulator SEBI.
ipo date
The government had filed fresh draft papers for the IPO last month. Currently, the government has till May 12 to initiate the proposal, failing which the Center will have to file fresh papers with the Securities and Exchange Board of India, give the December quarter results and also update the embedded price. Will happen. However, the government is now planning to launch this offer by the end of this month.
According to the draft papers, the embedded value of LIC as on September 31, 2022 was Rs 5.39 lakh crore. The valuation of LIC’s IPO is likely to be three to five times the embedded value. The IPO was earlier planned to be launched by March in the last financial year 2021-22, but the high volatility in the markets due to the Russo-Ukraine war derailed the plan.
reserve quota
About half of the IPO issue has been earmarked for qualified institutional buyers (QIBs), while around 15 per cent will be earmarked for non-institutional investors (NIIs). Retail investors can participate in the 35% offer. One-third of the anchor investor will be reserved for domestic mutual funds.
A significant portion will also be reserved for policyholders And it should not exceed 10 per cent of the public issue. For employees also, 5 percent of LIC’s IPO will be reserved. Both employees and policyholders will get a chance to book LIC IPO at a discounted rate.
cross-selling products
LIC can explore cross-selling products through its housing finance arm LIC Housing Finance. According to a report in Business Standard, this will help LIC strengthen another channel for selling its policies. The report, quoting a senior government official, said that the Center has informed investors during the roadshow that LIC will be cross-selling its policies.
LIC will be the biggest IPO
LIC’s IPO will be the biggest IPO ever in India. So far, Paytm’s IPO is the biggest ever in 2021 at Rs 18,300 crore, followed by Coal India Ltd in 2010 at Rs 15,500 crore and Reliance Power in 2008 at Rs 11,700 crore.
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