LIC gets SEBI’s nod for the biggest Indian IPO ever
- LIC had submitted its draft documents to the market regulator in February
- The issuance would be an offer for sale of 31,62,49,885 equity shares
- The government was expecting to sell a 5% stake in LIC this month
Life Insurance Corporation of India (LIC) got approval from market regulator Sebi on Tuesday to raise funds through an initial public offering, according to CNBC-TV18. This month, the government was expecting to sell a 5% stake in Life Insurance Corporation (LIC), which may generate more than Rs 60,000 crore for the exchequer.
LIC had submitted its draft documents to the market regulator in February. The issuance would be an offer for sale of 31,62,49,885 equity shares by the government, which owns 100% of the insurance behemoth.
A total of 50% of the net issue would be allocated for qualified institutional buyers (QIBs), with the remaining 15% reserved for non-institutional investors. The retail part of the promotion has been set at 35%. According to the DRHP, the issue will most likely have reservations for eligible employees and policyholders of the company.
Domestic mutual funds will be allocated one-third of the anchor share. According to reports, the government may postpone the massive offering until the next fiscal year, beginning April 1, due to increased volatility as a result of the continuing Russia-Ukraine crisis.
LIC owns six subsidiary companies which include LIC Pension Fund, LIC Cards Services, LIC Housing Finance, LIC Mutual Fund Trustee Company, LIC Mutual Fund AMC and IDBI Bank. In the first half of FY22, LIC reported a PAT of Rs 1,437 crore as compared with Rs 6.14 crore in the year-ago period. Its new business premium growth rate stood at 554.1% in H1 FY22, compared with 394.76% during the corresponding period of the preceding financial year.
In FY21, LIC reported a net premium income of Rs 4.02 lakh crore and the total revenue stood at R 6.82 lakh crore. Profit after tax (PAT) came in at Rs 2,900 crore. LIC holdings in value terms stood at Rs 9.53 lakh crore at the end of the third quarter, up 1.46% from the previous quarter. It owns a 16% stake in ITC, 7.48% in M&M, 2.63% in HDFC Bank, 6.13% in Reliance and 5.67% in Infosys.