LIC IPO: Government mulling discount for retail investors; RHP may be filed with SEBI today with key details, including price band

LIC IPO: In a big surprise, the government is mulling a discount for retail investors in the initial public offer (IPO) of Life Insurance Corporation (LIC), Zee Business Senior Special Correspondent Anurag Shah said citing sources on Tuesday. 

According to Shah, “The board of LIC is scheduled to meet on April 26, 2022, and a RHP is likely to be filed with the Securities and Exchanges Board of India (SEBI) today, wherein all the key details of IPO, including price band and discount information, will be mentioned.”  

RHP (Red Herring Prospectus) that is supposed to be filed with SEBI will contain information related to discounts of all categories, Shah further stated, adding that the government is also mulling up to a 10 per cent discount for insurance policyholders. 

As expected, the LIC's IPO is likely to be open on May 4 and shall close on May 9, 2022. The issue price expected for the offer to be Rs 940 per share, the senior special correspondent said.  

Based on investor feedback, the market value of government owned LIC has been pegged at 1.1 times its embedded value, or Rs 6 lakh crore.  

The government had in February planned to sell 5 per cent stake or 31.6 crore shares in the insurance behemoth and had filed draft papers with SEBI. However, the LIC IPO plans faced headwinds from the ongoing market volatility due to the Russia-Ukraine war.  

Last week, the government decided to lower the issue size to 3.5 per cent.  The government has also filed papers with Sebi seeking exemption from the 5 per cent stake sale norm, sources said.  

LIC's embedded value, which is a measure of the consolidated shareholders’ value in an insurance company, was pegged at about Rs 5.4 lakh crore as of September 30, 2021, by international actuarial firm Milliman Advisors.