BSE introduces policyholder as sub-category for IPO bids

BSE has introduced a new sub-category called “POL” – policyholder for bidding on its book building platform in what could be seen precursor for the mega initial public offering (IPO) of the Life Insurance Corporation (LIC).

A notice put out by BSE said, “The policyholder can bid for this category of the reservation if the reservation for policyholder is set aside by issuer for Initial Public Offer (IPO)/ Further Public Offer (FPO). The new sub-category code of Policyholder category shall be – POL.”

To familiarise all participants with the bidding process for 'Policyholder' category, BSE has activated a mock issue from November 22 till December 24.

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The LIC IPO brings a lot of excitement and curiosity as the government could be looking at offloading up to 10 percent of its stake and some fresh equity issuance by the insurer ahead of its business expansion plans.

The planned IPO of LIC could fetch the government around Rs 80,000-1,00,000 crore if 10 percent of its stake is divested and the valuation could be anywhere in the range of Rs 8-11.5 lakh crore.

Tuhin Kanta Pandey, Secretary in the Department of Investment and Public Asset Management (DIPAM) at a recent meet said, “On LIC IPO, we are working very hard. For the capital market, it will be a very big event in the first quarter of 2022.”

He was speaking at the CII Global Economic Policy Summit 2021.

It is expected that the LIC IPO will have 10 percent reservation for policyholders and a quota set aside for employees. The insurance behemoth has a base of 2.92 lakh employees and around 22.70 lakh agents.

The balance sheet of LIC stands at around $500 billion in size and is just below $550 billion of State Bank of India. Also, despite the presence of private players in the Indian insurance sector, LIC commands around 72 per cent of the market share.

The IPO of LIC and privatisation of some other PSUs is critical for the government to meet its disinvestment target of Rs 1.75 lakh crore for FY22.