LIC IPO: What We Know So Far

LIC IPO News: The Board of Directors of LIC are scheduled to meet on Friday to discuss the LIC IPO listing. Key details like embedded value, discount to policyholders will be finalised in the meeting.

New Delhi: LIC IPO is one of the most anticipated IPOs in India in the current financial year. According to a latest report by BloombergQuint, the Indian government is aiming to sell a 5 per cent stake in the state insurer for the country’s biggest IPO, till date. The government will sell 316 million shares out of the 6.32 billion shares it owns in the company.

The Board of Directors of LIC are scheduled to meet on Friday to discuss the LIC IPO listing, according to Economic Times. After the discussion concludes, the Draft Red Herring Prospectus (DRHP) will be filed with the Securities Exchange Board of India (SEBI). The Board will discuss key points like discounts to be offered to policyholders etc. According to the report, the company may offer a discount of 5 per cent to the policyholders and may reserve 10 per cent of the total shares for them.

The DIPAM Secretary, Tuhin Kanta Pandey, said that the DRHP will be filed in the current week itself. For the unversed, it is only after the filing of DRH that the LIC IPO share price will be decided. It must also be noted that according to various reports, the embedded value of the LIC is estimated to be around Rs 5.4 lakh crore. The embedded value will also be decided in the key meeting today.

Worries Around Lower Disinvestment Target

However, since the announcement of Budget 2022, there have been apprehensions surrounding the IPO. The government has reduced the disinvestment target for the year ending March 2022 sizably. According to BloombergQuint, this might mean that the government is aiming less than anticipated from the LIC IPO.

The disinvestment target for the current year was lowered from Rs 1.75 lakh crore to Rs 78,000 crore for the current financial year, according to Finance Minister Nirmala Sitharaman’s speech. The disinvestment target for the next financial year has been set at a much lower Rs 65,000 crore. So far in 2021-22, the government has only been able to raise Rs 12,029 against a target of Rs 1.75 lakh crore. LIC IPO is expected to help the government to achieve the current year’s target.

Demat Accounts Booming

Another interesting news ahead of LIC IPO is that the country is registering a boom in the new Demat accounts opening. According to ET, a record of 34 lakh Demat accounts were opened in January 2022 and this trend may follow well in February 2022 too.

LIC currently has over 25 crore policyholders and they are expected to get a special discount on the shares. This has prompted investors to jump into the share market with hopes of considerable returns. This followed when the LIC released a notification in December 2021 saying that the policyholders must update their PAN cards and open Demat accounts in order to participate in the IPO.

LIC IPO: Key Points

• LIC IPO Date: The IPO is expected to open for subscription in the current financial year itself, by the end of March 2022.
• LIC IPO Price: Once the DRHP is filed with the SEBI, the company’s discounts and share price will be decided.
• LIC IPO Size: The IPO is expected to be India’s biggest IPO. According to media sources, the government might raise around Rs 65,000 crores from the IPO.
• LIC IPO Discount: The policyholders are expected to get a discount of 5-10 per cent per equity share.