LIC IPO: Will company employees, policyholders get any discount in share price, stock reservation? Details here

Setting the stage for the country's biggest ever public offering, Life Insurance Corporation had on Sunday filed draft papers with capital market regulator Sebi for the sale of 5 per cent stake by the government.

The initial public offering (IPO) of over 31.6 crore shares or 5 per cent government stake is likely to hit the D-street in March.

Amid the much-anticipated launch of LIC IPO, questions are rife from LIC employees and policyholders about whether there will be any reservation, discount for them?

- Employees and policy holders of the insurance behemoth LIC would get a discount over the floor price, as per a PTI report.

- The Government, however, did not disclose in the DRHP the discount which will be given to policyholders or LIC employees in the public offering. As per norms, up to 5 per cent of issue size can be reserved for employees and up to 10 per cent for policyholders.

LIC IPO

-The IPO is offer for sale (OFS) by the Government of India and no fresh issue of shares by Life Insurance Corporation (LIC).

-The Government holds 100 per cent stake or over 632.49 crore shares in LIC.

- The face value of shares is Rs 10 apiece.

- The LIC IPO would be the biggest IPO in the history of Indian stock market and once listed LIC's market valuation would be comparable to top companies like RIL and TCS.

So far, the amount mobilised from IPO of Paytm in 2021 was the largest ever at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore.

Disinvestment target of Rs 78,000 crore

- The IPO of LIC is expected by March and the proceeds would be crucial to meet the revised disinvestment target of Rs 78,000 crore in the current fiscal.

- So far, the government has raised Rs 12,030 crore through CPSE disinvestment and Air India strategic sale this fiscal.

- Life Insurance Corporation (LIC) share capital was raised from Rs 100 crore to Rs 6,325 crore during September last year to help facilitate IPO.

-The government has appointed 10 merchant bankers, including Kotak Mahindra Capital, Goldman Sachs (India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd, to manage the mega IPO of the country's largest insurer.

-The Cabinet Committee on Economic Affairs had in July last year cleared the proposal for LIC's IPO.

-The government is also mulling allowing foreign investors to pick up stake in LIC. As per Sebi rules, foreign portfolio investors (FPI) are permitted to buy shares in a public offer. FDI policy would have to be tweaked for FII/FPI investment in this IPO, as LIC is a corporation and not an insurance company.

LIC Results

-Last month, LIC reported a profit after tax of Rs 1,437 crore for the first half of the financial year 2021-22 as compared with Rs 6.14 crore in the year-ago period.

- Its new business premium growth rate stood at 554.1 per cent in the first half of 2021-22, compared with 394.76 per cent during the year-ago period.

- There are currently 24 life insurance companies in India, with LIC being the sole public player. The size of the Indian life insurance industry was Rs 6.2 lakh crore on a total-premium basis in fiscal 2021, up from Rs 5.7 lakh crore in fiscal 2020.

(With PTI inputs)