The LIC’s initial public offering (IPO) size will have a price band of Rs 902 to Rs 949, resulting in the issue size being between £2 and 2.1 billion, depending on the final price, making it India's largest IPO even after being scaled down due to adverse market conditions.
Policyholders will be eligible for a Rs 60 discount on the issue price while employees and other retail investors will get a value of Rs 45, sources said after the insurance board approved the details. The discount works out to just below 10%, for which an enabling provision was included when the government amended the Life Insurance Corporation Act. The IPO will open on May 2 for anchor investors. It will be open for public subscription between May 4 and May 9.
The 221.3 million shares being offered represent 3.5% of the total capital base of the corporation that is being divested by the government. Of this, 22.1 million shares (10% of the issue size) are reserved for policyholders while 15,00,000 shares are reserved for employees. Of the remaining shares, 50% are reserved for qualified institutional buyers, and retail (35%) and non-institutional investors (15%).
Of the portion reserved for QIBs, 60% is for anchor investors, indicating that the anchor book will be around £630 million only - smaller than the £830 million anchor book in the case of Paytm IPO. The issue price values the corporation at £60 billion at the upper end and £57 billion at the lower end of price band. This is around 1.1 times the corporation’s embedded value of £54 billion as of September.
