The pricing band for the underlying offer of the state-run Life Insurance Corp. of India (LIC) has been fixed at 902-949 per offer, with a 60 markdown for policyholders and a 45 markdown for representatives. The government intends to raise approximately 21,000 crores at the high end of the price range in what may be India’s largest such transaction.
According to those aware of the decisions made during an upper-level gathering on Tuesday, the government would sell 3.5 percent of LIC or 221.3 million offers. 22 million offers will be preserved for policyholders, while 1.5 million will be saved for representatives of the protection behemoth.
The IPO will be offered to the general public from 4 May to 9 May, with distribution to moor financial supporters beginning on 2 May.
“Subject to reservations, the surplus offers will be awarded in the proportion of 50% to qualified institutional buyers (QIB), 35% to retail financial backers, and 15% to non-institutional financial backers,” the authority stated, declining to be identified. “A little more than half of the QIB allocation will be set aside for anchor financial backers,” he adds.
The LIC IPO received 13,000 crores in speculative responsibilities from anchor financial supporters, which was more than double the value of offers given to such financial backers.
The government’s share in India’s largest guarantor is still far smaller than the initial 5 percent stock purchase is made. International pressures, falling oil prices, and money-related fixing by major national banks have made global financial backers wary of expanding company sectors stocks, pleading interest in LIC’s shares.
Financial supporter interest has dwindled as a result of Russia’s invasion of Ukraine, further undermining values.
The public authority has decided not to sell more than a 3.5 percent interest for at least a year after the posting date to provide financial supporters enough time to assess the offers’ merit following the posting.
However, while the duties of anchor financial backers total over 13,000 crore, the final distribution to them would be around 6,300 crore due to the issue size being reduced by the public authority.
Institutional investors who did not receive shares during the anchor designation interaction can obtain LIC from the certified institutional purchasers’ standard, which will give offers worth Rs 10,500 crore.
The LIC IPO would be the first in the country to sell a 3.5 percent share to the general public, which is less than the 5 percent administrative minimum set by the Securities and Exchange Board of India (Sebi).
According to the government’s updated estimates, LIC is valued at $6 trillion, which is just 1.1 times its original implanted worth of $5.39 trillion.
Because the public authority will sell a 3.5 percent ownership, the backup plan may be exempt from Sebi’s criteria, which requires public firms to achieve a base public shareholding of 25 percent in five years.
The public authority and Sebi are looking at methods to relax the criteria on least open shareholding for LIC, and according to current discussions, LIC might be allowed five years to meet the basic public shareholding aim as a one-time exemption. Mint first reported on April 13 that the public body has reduced the valuation it is seeking from LIC to make the underlying offer agreement more enticing.
LIC sold 21.7 million insurance contracts in the fiscal year ended 31 March, 3.54 percent higher than the previous fiscal year, increasing its share of the whole industry to 74.6 percent in terms of contracts sold.