LIC IPO announced May 4, 2022 as the opening date

The much awaited initial public offering, LIC IPO is going to open on May 4, 2022 as per the latest announcement. The opening date of the country's largest ever IPO of Rs 21,000 crores has been finally announced after all the buzz the offering has created in the Indian equity market over the past few months.

Summary in Brief

A report surfaced last night revealed that LIC IPO may open on May 4, 2022, and run for six days before closing on May 9, 2022. The same report also suggested that the IPO’s anchor book will open on May 2, 2022. After all these anticipations and guesses, we now have a fixed and official LIC IPO open date.

The Rs 21,000 crores worth of IPO is going to be the country’s biggest ever IPO. The Government, which is the major stakeholder in the behemoth insurer, is going to sell 3.5% (22.1 crores shares) stake through the upcoming public offering. The original filing, however, was of selling 5% (31.6 crores shares) stake from the nation’s biggest insurance company. The same was changed recently to 3.5% after the government filed a revised draft red herring prospectus (DRHP) with the SEBI. 

The LIC IPO, likely going to be India’s largest ever listing, has already created a lot of buzz and scuttlebutt among the investors. Not only for being the largest insurer, but the LIC IPO has also been in talks for a number of reasons like the recent change in issue size, reservation for policyholders and employees, rumors spreading around the open date, etc. Let us go through all the changes and confirmation that we witnessed in the last couple of months.

Key changes the LIC IPO went through

As said, the LIC IPO has gone through a number of changes, few official and some expectations. 

Change in the issue size

First and foremost is obviously the recently done revision in the issue size of the LIC IPO. The insurer filed an updated draft with the market regulator SEBI in which the issue size was changed to Rs 21,000 crores for around 22.14 crores of shares. The government is now selling 3.5% stake in the market against 5% which was as per the first filing. As per SEBI’s rule, companies with over Rs 1 lakh crore of valuation will have to sell at least 5% stake in the market to get listed. However, LIC was exempted from this and allowed to sell only 3.5% stake even though its valuation was pegged at 5.4 lakh crores (as of September 2021) by Milliman Advisors (an international actuarial firm).

Delay in listing

If you have been following LIC IPO news, you should have been aware of the fact that the launch of the IPO was initially planned for March. However, market volatility triggered by the Russia-Ukraine crisis led the government to postpone the listing or the IPO open date. Going to be the country’s largest ever IPO which has already received more than enough anticipation from investors, the government was not willing to make the LIC IPO launch a scapegoat for negative Indian equity market sentiments due to the rising geopolitical tensions between countries and consequent havoc in the world market. However, fortunately, we now have an official open date. So let us know all the official numbers, dates, and updates related to the LIC IPO launch.

LIC IPO: Everything we know so far

LIC IPO open date

After a number of speculations, rumors, and third party reports, the LIC IPO has finally got an official open date which is May 4, 2022.

LIC IPO Close date

As per the official announcement, the LIC IPO close date is May 9, 2022.

LIC IPO Issue size

As per the latest DRHP filed by the insurer, the issue size is going to be around Rs 21,000 crores for nearly 22.1 crores shares.

Stake being sold by the government

Government, which currently holds 100% stake in LIC, is going to offload 3.5% through the IPO. 

LIC IPO Valuation

As per the latest DRHP filed with SEBI, LIC valuation was pegged at 5.4 lakh crores (as of September 2021) by Milliman Advisors (an international actuarial firm). The IPO is expected to value LIC at around 1.1 times the embedded value. 

LIC IPO reserved quota for retail investors and others

• Retail Investors- 35% of the issue size and 
• Non-institutional investors- 15% of the issue size
• The remaining 50% is kept for qualified institutional buyers (QIBs), out of which 60% has been fixed for anchor investors on a discretionary basis. 

Nearly 33% or one-third of the anchor investors' part is embarked on domestic mutual funds. The insurer will also reserve not more than 10% of the issue size for its existing policyholders (policy being bought before February 28, 2022) and 5% for its employees. Furthermore, both policyholders and employees will also be able to book lots in the IPO at a discounted rate. 

Read the eligibility criteria for LIC IPO policyholder reservation and other details here.

About LIC

Established on 1 September 1956, the Life Insurance Corporation of India or LIC is the country’s largest insurer and has been providing life insurance policies to Indians for over 65 years. Formed by nationalizing and merging around 245 private life insurance provider companies, LIC now has a broad range of diversified insurance products. Its success as an insurer is reflected by the fact that the company enjoys around 64.1% market share in terms of GWP, 66.2% in terms of NBP, and 74.6% and 81.1% in terms of the number of individual and group policies sold respectively as of Fiscal 2021. 

LIC Financials

Here are the key company financials:

Learn more about LIC, its financials and important ratios here.

Should You Invest in IPO

It goes without saying that the LIC IPO has taken a lot of space in the news since the company announced the IPO, and particularly when the first DRHP was filed. The insurer has strong financials and backing, which speak in its favour. However, as a sound investor, you should evaluate all the important pros and cons before making a decision. To help you out with the same, we have compiled a list of strengths and weaknesses that LIC and its upcoming IPO have.

Key Strengths

• LIC is the largest insurer in India and the fifth largest globally by GWP. Furthermore, India is one of the fastest growing markets in the life insurance sector.
• Trusted by millions of households and enjoys government backing.
• Has diversified its product portfolio over the years. Now offers a range of individual and group insurance products.
• Wide presence throughout the country. LIC operates with 2048 fully computerized branch offices, 113 divisional offices, 8 zonal offices, and 1381 satellite offices, which altogether has made the insurance company enjoy a stronghold in urban as well as rural areas.
• LIC is also the largest asset manager in India. As of September 30, 2021, the company has an AUM of Rs 39 lakh crores.
• Robust and extensive network of policy agents, strong board, and qualified management team. As of March 2021, the insurer has over 1.35 million individual agents, which is over 7 times more than the second largest insurer in the country, SBI Life has.

Major Weaknesses

• Operates in a highly competitive industry with a number of growing private players.
• As of March 2020, LIC’s persistency ratios have seen a decline, according to the DRHP filed with SEBI.

That’s all there is to know about the LIC IPO as of now. Keep following INDmoney to know the latest updates related to LIC IPO. Know what? You can also invest in the upcoming LIC IPO through INDmoney.