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All You Need to Know LIC IPO
03 Aug 2023

Touted to stand as one of India’s largest ever initial stock sale, the LIC IPO, much-anticipated, will be delayed further as a result of volatility in the markets. The volatility, largely due to the Ukraine crisis, has seen the markets swing from side to side, and this is not a time for companies to launch public offerings. The silver lining in all of this is that investors have even more time to make calls as to whether investment in the upcoming IPO should be made at all. If you are looking to invest in the ‘blockbuster’ IPO of all time (at least in a long time), you should know important aspects of the offering. 

Lift Off

The government of India is yet to decide on the official launch date of the LIC (Life Insurance Corporation Of India) IPO, but indications suggest that it won’t be launched till somewhere around the middle of April 2022. Reuters has reported that the Indian government has enough of a window till 12 May till the launch of the IPO. In case the government decides to launch the LIC IPO at a later date, fresh papers of the draft will be required for submission, and delays will be extended. Hence, if you want to open a Demat account online solely for the purpose of investment in the LIC IPO, you can do so, but you will have to be patient till the LIC IPO hits the launch pad. Incidentally, the draft papers of the initial public offering were duly filed with SEBI, or the Securities and Exchange Board of India on 13 February, and the Draft Red Herring Prospectus (DRHP) was given authorisation by SEBI. 

LIC IPO Value, Price and Size 

For any upcoming IPO, investors would like to know details of its value, price, size and other allotment information before investment. Hence, it is important to know that policyholders and employees of the government insurer (LIC) will get a discount while investing, over and above the floor price. This is vital to consider as it may lead to the allotment of more shares to employees and policyholders, and leave a fraction of the amount for new investors. In terms of size and valuation, here are some more details of the upcoming IPO to consider: 

  • The government proposes to sell its stake in LIC, amounting to 5% (or more than 31.6 crore shares) and yielding an amount which has been estimated at Rs. 63,000 crores. 
  • Based on the DRHP, the Life Insurance Corporation of India’s value (embedded value) is pegged at approximately Rs. 5.4 lakh crores, as of 30 September 2021. This embedded value is a measure of the consolidated value of shareholders in the insurance company, according to the global actuarial corporation of Milliman Advisors. 
  • The DRHP does not shed light on LIC’s market valuation, but, based on the standards of the industry, it could well be 3 times that of the value. This could work out to approximately Rs. 16 lakh crores (based on a report by PTI). 
  • This Initial Public Offering or IPO is historically the biggest in the stock markets of India, and after listing is completed, this would easily be comparable with top-rated companies on exchanges (similar to TCS and RIL, for insurance). 

LIC IPO Launch Fixed

Recent news about the launch of the LIC IPO has investors enthusiastic and happy again. The IPO will finally be open for investment on 2 May 2022 for LIC employees and policyholders. Retail investors will get to invest on 4 May. The offer will close on 9 May for all. Additionally, the price band that has been fixed is Rs. 902- Rs. 949. Furthermore, the Indian government plans to let LIC policyholders have a 60% discount and retail investors and employees to get a 45% discount. 

In other news about the much-anticipated IPO, the LIC board has now decided to cut the IPO’s issue size from 5% to 3.5%. The government will sell only its stake of  3.5% which amounts to Rs. 21,000 crores. 

Upcoming IPO Investment

Since you know the date of the launch, you should prepare yourself for investment in the LIC IPO, and do so within a day of the public issue coming out. This will increase your chances of allotment, if you are new to LIC as a company. Consider the fact that you must link your PAN Card details with your LIC policy if you are already an LIC policyholder wishing to become eligible for investment in the LIC IPO and avail of the discount against the floor price. It is very easy to open a Demat account with a reputed broker such as Motilal Oswal and learn more about the LIC IPO from here. Stay updated on the latest Upcoming IPO 2023!


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