LIC DRHP filed; govt to sell 5% stake in India's largest IPO

Government-owned insurer Life Insurance Corporation of India (LIC) has filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) for its initial public offering (IPO).

As per the draft, LIC will offload 316.25 million shares (over 31 crore), an offer representing 5 percent equity.

The IPO is 100 percent offer for sale (OFS) by Government of India and no fresh issue of shares by LIC, said DIPAM secretary Tuhin Kanta Pandey. If approved, it will be listed in March 2022, and will be India's largest share sale.

The government plans to reserve a portion of the IPO for anchor investors. Up to 60 percent of qualified institutional buyers (QIB) portion will be allocated to anchor investors on a discretionary basis, the DHRP said.

The employee reservation portion will not exceed 5 percent of the post-offer equity share capital, while the policyholder reservation portion will not exceed 10 percent of the offer size.

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LIC has a 66 percent market share in new business premiums, with 283 million policies and 1.35 million agents as of March 31, 2021, the Department of Investment and Public Asset Management (DIPAM) said.

The embedded value of LIC as of September 30, 2021, stood at Rs 5.4 crore. As of March 2021, the assets under management (AUM) stood at Rs 31 trillion.

The IPO will be managed by Kotak Mahindra, Citi Bank, Axis Bank, Nomura, BofA Securities, Goldman Sachs, ICICI Securities, JM Financial and JP Morgan.

The promoter of LIC is the President of India, acting through the Ministry of Finance, Government of India.

While actuarial firm Milliman Advisor was appointed by the Government to calculate the embedded value of LIC, Deloitte and SBI Caps have been appointed as pre-IPO transaction advisors.

Earlier this month, in her Budget speech, Finance Minister Nirmala Sitharaman had said that the LIC IPO is "expected shortly".