LIC IPO: LIC gets Sebi approval to launch India’s biggest ever IPO

NEW DELHI: Market regulator Sebi has approved the much awaited LIC IPO, sources told ET NOW. According to the report, Sebi has issued observation letter for the same. The approval has come within 22 days of filing.

LIC had in February filed its draft papers with the market regulator. The issue would be an offer for sale of 31,62,49,885 equity shares by the government, which holds 100 per cent stake in the insurance behemoth. A total of 50 per cent of the net issue would be reserved for qualified institutional buyers (QIBs), whereas non-institutional buyers will have 15 per cent of shares allocated for them. The retail portion has been fixed at 35 per cent of the offer.

The issue is likely to have reservations for eligible employees and policyholders of the company, according to the DRHP. One third of the anchor portion will be reserved for the domestic mutual funds.

There have been reports that the government may defer the mega offering to the next financial year, starting April 1, due to higher volatility on account of the ongoing Russia-Ukraine war. The government was expected to sell 5 per cent stake in Life Insurance Corporation (LIC) this month, which could fetched over Rs 60,000 crore to the exchequer.

IPO approvals are valid for a period of 12 months from the date of Sebi’s final observation.

In a recent note, Edelweiss said the behemoth’s decades of dominance is seen in the market share of 66 per cent in new business premiums, 3 times the next largest player. It said LIC is largest asset manager with 80 per cent market share, over 15 times the next largest; agency channel of over 7 times of private and is most efficient.

Besides, it has a deep reach of 75 per cent market share on policy basis, Edelweiss said. But “Even as its embedded value (EV) has shot up, LIC’s RoEV (10-12 per cent) is sub-private peers (18-25 per cent). This along with a high par skew, market share loss (individual segment) and a PSU badge calls for a discount to private peers. And competition and profitability squeeze overhang the sector at large, not to mention stake sale uncorking a huge supply,” Edelweiss said.