Explained in 5 charts: India’s biggest IPO ever

NEW DELHI: India’s biggest ever initial public offer (IPO) by Life Insurance Corporation (LIC) of India is finally here.
After much speculations, the government on Wednesday filed a revised draft red herring prospectus (DRHP) with Securities and Exchange Board of India (Sebi).
“The time has come for LIC to be listed. I believe all LICians will work together to make it a huge success, and from now on we will call it LIC 3.0,” LIC chairman MR Kumar said at a press briefing.
Here are the key details:
The much-awaited IPO will open for subscription on May 4 and the offer will close on May 9. However, the anchor investors have an advantage here, for them the IPO will open from May 2.
Price band has been fixed between Rs 902-949 per share. At this upper band, the government will garner around Rs 21,000 crore.
In the revised DRHP, the government has reduced size of the IPO to Rs 20,557 crore from Rs 60,000 crore earlier. However, even at this price, LIC’s IPO will be the biggest one to be witnessed by financial markets in India so far.
This means that instead of offering 5 per cent of the shares for the IPO, as was decided earlier, the government will sell 3.5 per cent stake.

LIC will offer 22.13 crore shares for sale at a face value is Rs 10 per share. While, the floor price is 90.2 times the face value of equity shares.
Further, the cap price is 94.9 times the face value, the insurance behemoth said in its DRHP filed with Sebi.
About 0.025 per cent of the issue, that is 15.81 lakh shares will be reserved for employees of LIC, while 0.35 per cent or 2.21 crore shares have been reserved for eligible policyholders.
In addition, half of the shares are reserved for qualified institutional buyers (QIBs), while 15 per cent are for non-institutional investors.

Of the portion reserved for QIBs, 60 per cent is reserved for anchor investors.
Eligible policyholders of LIC will receive a discount of Rs 60 on the issue price, while employees and retail investors will get a discount if Rs 45.
One lot of IPO will comprise 15 shares, so investors will need to choose accordingly. They can bid for a lot size of 15 or in its multiples thereof.
Successful bidders will be allotted shares on May 12, while unsuccessful bidders will receive refund on the same day.
Besides, LIC has received in-principal approval for listing of shares from both BSE and NSE, the prospectus said.
Finally, shares of LIC will make their debut on the bourses on May 17.
The entire net proceeds of the issue will be paid to the President of India and LIC will not receive any proceeds of the offer, the company said.
The pre-offer equity shareholding of the promoter is 100 per cent, and upon completion of the offer the promoter will a certain percentage of the outstanding equity shares, which will allow the promoter to continue to exercise significant influence.
As a result, the government will continue to exercise significant influence over LIC’s business and all matters requiring shareholder’s approval, including proposed 5-year plans, revenue budgets, transactions with the government and other controlled entities, among other operations.
What LIC chairman said
LIC chairman MR Kumar expects some of the companies that the insurance firm invests in to act as domestic investor for the IPO.
He said that foreign institutional investors (FIIs) have some concerns about the IPO but global pension funds have “good interest” in the issue.
“FIIs have concern, (there is) no doubt that they have concerns but long-only funds (pension funds) they don’t mind because they know that they are putting money in for the long haul,” Kumar said.

Earlier in the day, Tuhin Kanta Pandey, secretary at the department of investment and public asset management, said the LIC IPO was being brought to market in May due to strong demand and a “solid” anchor investor base.
Pandey had also said the size of the LIC IPO is “optimal” in current market conditions, defending its move to cut the stake sale plan from 5 per cent.
About LIC
LIC was formed by merging and nationalising 245 private life insurance companies in India on September 1, 1956.
It had an initial capital of Rs 5 crore.
LIC is the fifth largest life insurer globally (comparing LIC’s life insurance premium for fiscal 2021 to its global peers’ life insurance premium for 2020) and the largest asset manager in the country as at December 31, 2021.
It covers almost 91 per cent of all districts in India and had the largest individual agency network among life insurance entities in India, comprising approximately 1.33 million individual agents.