On Tuesday, the insurance powerhouse LIC announced that it has raised slightly more than Rs 5,627 crore from anchor investors, primarily domestic institutions, ahead of its mega initial public offering (IPO). In an early morning statement to exchanges, the insurer stated that the Anchor Investors’ (AIs) part was subscribed at Rs 949 per equity stake.
According to the report, 4.2 crore shares (71.12 percent) of the 5.9 crore shares granted to AIs were distributed to 15 domestic mutual funds via 99 schemes. In addition, certain domestic insurance firms and pension funds are invested.
The Government of Singapore, the Monetary Authority of Singapore, the Government Pension Fund Global, and BNP Investment LLP were among the foreign participants. According to the prospectus, 5.93 crore shares were reserved for anchor investors out of the 22.13 crore shares. By diluting a 3.5 percent share in LIC, the government would raise Rs 21,000 crore, the largest ever IPO in the Indian market. Previous high fundraising was witnessed in Paytm’s IPO in 2021 at Rs 18,300 crore and Coal India’s IPO in 2010 at Rs 15,200 crore. The LIC IPO price band is Rs 902-949 per equity share.
Policyholders would receive a Rs 60 reduction for each equity share, while retail investors and workers will receive a Rs 45 discount per share. Over 9.88 crore shares are allocated for qualified institutional purchasers, while around 2.96 crore shares are reserved for non-institutional buyers. Employees and policyholders are entitled to 15,81,249 shares and 2,21,37,492 shares, respectively. On May 17, LIC will be listed and begin trading on stock markets. Milliman Advisors, an international actuarial firm, estimated LIC’s embedded value, which measures the consolidated shareholders’ value in an insurance company, at around Rs 5.4 lakh crore as of September 30, 2021.
The LIC was created on September 1, 1956, by combining and nationalizing 245 private life insurance firms, with a starting capital of Rs 5 crore. According to investor input, the market value of the government-owned LIC is 1.1 times its inherent value or Rs 6 lakh crore. Its product offering consists of 32 different items (16 participating and 16 non-participating) and seven individual optional rider perks. The group product range of the insurer includes 11 group products. As of December 2021, LIC had a demand share of 61.6 percent in terms of premiums or GWP, 61.4 percent in terms of new business premium, 71.8 percent in terms of the number of personal policies published, and 88.8 percent in terms of the numeral of different guidelines issued.