LIC IPO likely to hit the markets at month-end with reduced valuations

LIC IPO: The government is now planning to cut its valuation by 30% to Rs 11 lakh crore to make it more attractive, against Rs 16 lakh crore earlier

LIC IPO to hit makts in month end

NewDelhi: LIC IPO - India’s largest insurance company LIC is expected to launch its much-awaited initial public offering (IPO) by the end of this month with a reduced valuation of about 30% from its previous valuation to make it more attractive, as per the report. Since the Russia-Ukraine war has rattled all the financial markets across the globe. Amid this volatile market; the Centre wants to realize maximum benefit so it decided to curtail the present valuation of LIC from Rs 16 lakh crore to about Rs 11 lakh crore for the IPO.

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Size of the LIC IPO

The Centre aims to raise around Rs. 60,000 crore by selling its 5 percent stake in the govt-owned company LIC. The government is also working over raising the size of the LIC IPO. After discussing with investment bankers, the Centre may file an updated draft red herring prospectus (DRHP) with Sebi soon.

LIC IPO Date: Govt to Launch IPO by end of this month or early-May

Centre has filed fresh DRHP last month for the IPO. Till May 12 govt has time to launch the offer, after that it will need to file fresh papers with the SEBI with updated embedded value and December quarter results. However, the government is looking to launch the offer by the end of this month.

LIC’s embedded value stood at Rs 5.39 lakh crore as of September 31, 2022, according to DRHP. The actual valuation of LIC IPO is likely to be 3-5 times the embedded value. The IPO was earlier planned to be launched by March but the high volatility due to the Russia-Ukraine war has derailed the plan.

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Reserved Quota

While half of the IPO size has been fixed for qualified institutional buyers (QIB), about 15% is reserved for non-institutional investors (NII). Retail investors can participate in 35%. One-third of the anchor investor portion is reserved for domestic mutual funds.

A significant portion will also be earmarked for the policyholders and it should not exceed 10% of the IPO. For employees also, 5% of the issue is reserved. Both the employees and policyholders will get a chance to book LIC IPO even at a discounted rate.

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LIC IPO to be the biggest issue in India

To date, Paytm IPO was one of the biggest issues at Rs 18,300 crore in 2021, followed by Coal India Ltd at Rs 15,500 crores in 2010 and Reliance Power IPO of Rs 11,700 crore in 2008. But the LIC IPO will be the biggest IPO ever in India.

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