DRHP – Z+ Insurance

LIC policyholders need to update PAN details by Feb 28 to participate in IPO

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On February 13, the state-run insurer filed draft papers with capital market regulator Sebi for sale of 5 per cent stake by the government for an estimated Rs 63,000 crore.

The initial public offering (IPO) of over 31.6 crore shares or 5 per cent government stake is likely to hit the market in March and employees and policyholders of the insurance behemoth would get a discount over the floor price.

“A policyholder of our Corporation shall ensure that his / her PAN details are updated in the policy records of our Corporation at the earliest.

“A policyholder who has not updated his / her PAN details with our Corporation before expiry of two weeks from the date of the filing of this DRHP with SEBI (i.e., by February 28, 2022) shall not be considered as an Eligible Policyholder,” as per the DRHP. The PAN updation can be done on LIC’s website either directly or with the help of agents.

It further said policyholders having one or more policies of LIC as on the date of the DRHP and bid / offer opening date and who are residents of India would be eligible to apply in this offer, under the Policyholder Reservation Portion.

The aggregate of reservation for eligible policyholders shall not exceed 10 per cent of the total offer size. The portion of the offer available for allocation to eligible policyholders on a proportionate basis is subject to the receipt of necessary approvals from the government.

LIC issued approximately 21 million individual policies in FY 2021, accounting for nearly 75 per cent of new individual policy issuances.

The IPO is offer for sale (OFS) by the Government of India. There is no fresh issue of shares by LIC. The government holds 100 per cent stake or over 632.49 crore shares in LIC. The face value of shares is Rs 10 apiece.

The LIC public issue would be the biggest IPO in the history of the Indian stock market. Once listed, LIC’s market valuation would be comparable to top companies like RIL and TCS.

The IPO of LIC is expected by March and the proceeds would be crucial to meet the revised disinvestment target of Rs 78,000 crore in the current fiscal.

LIC’s share capital was raised from Rs 100 crore to Rs 6,325 crore during September last year to help facilitate the IPO.

Last month, LIC reported a profit after tax of Rs 1,437 crore for the first half of the financial year 2021-22 as compared with Rs 6.14 crore in the year-ago period. Its new business premium growth rate stood at 554.1 per cent in the first half of 2021-22, compared with 394.76 per cent during the year-ago period.

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LIC To File Draft Papers For Initial Public Offer With SEBI In November

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LIC To File Draft Initial Public Offer Papers With SEBI In November

LIC will file draft papers for initial public offer with SEBI by November 2021

The country’s largest insurer, Life Insurance Corporation (LIC), is likely to file draft papers with Securities and Exchange Board of India (SEBI) by November for the largest initial public offer (IPO) in the country’s history, a finance ministry official has said.

“We target to bring the IPO within this fiscal and we have set strict timelines. The draft red herring prospectus (DRHP) would be filed by November,” the official said.

Once the DRHP is filed, merchant bankers will hold global and domestic roadshows for investors by January, the official informed further.

The government last month appointed 10 merchant bankers, including Goldman Sachs (India) Securities Private Limited, Citigroup Global Markets India Private Limited and Nomura Financial Advisory and Securities (India) Private Limited to manage the LIC IPO.

Other selected bankers are SBI Capital Market Limited, JM Financial Limited, Axis Capital Limited, BofA Securities, J P Morgan India Private Limited, ICICI Securities Limited and Kotak Mahindra Capital Company Limited.

Cyril Amarchand Mangaldas has been appointed as legal adviser for the IPO.

The government is aiming to list the insurance behemoth within the current financial year.

The ministry is in the process of estimating the embedded value of the life insurer and once that is done, the ministerial panel on disinvestment will decide on the government stake that will be divested through IPO, the official said.

The government has appointed actuarial firm Milliman Advisors LLP India to compute the embedded value of LIC ahead of the initial public offering.

The government is also mulling allowing foreign investors to pick up stakes in country’s largest insurer. As per SEBI rules, foreign portfolio investors (FPIs) are permitted to buy shares in a public offer. However, since the LIC Act has no provision for foreign investments, there is a need to align the proposed LIC IPO with SEBI norms regarding foreign investor participation.

The Cabinet Committee on Economic Affairs had in July cleared the initial public offering proposal of Life Insurance Corporation of India.

The listing of LIC will be crucial for the government in meeting its disinvestment target of Rs 1.75 lakh crore for 2021-22.

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