MUMBAI, 27 APRIL, 2022 (GPN): The Life Insurance Corporation’s (LIC) public issue offer is finally here, with the long-awaited initial public offering (IPO) to open on May 2 for anchor investors and from May 4 to May 9 for the general public, the insurance behemoth confirmed on Wednesday at its press conference organised at hotel Taj Mahal Palace, Mumbai.

Beginning of “LIC 3.0”, says LIC Chairman M R Kumar, referring to India’s biggest public issue, which will be in the price band of ₹ 902-949, with a Rs 60 discount to policyholders and a Rs 45 discount for retail investors and employees.

Department of Investment and Public Asset Management (DIPAM) Secretary Tuhin Kanta Pandey said listing of LIC is part of the long-term strategic vision of the government and will highly enhance the value of the corporation in the long-run.

“This (LIC IPO) is right sized, considering the capital market environment and will not crowd out capital supply given the current market environment,” Mr Pandey said on Wednesday.

Even after the reduced size of about Rs 20,557 crore, LIC IPO is going to be the biggest initial public offering ever in the country, he said.

The employee reservation portion will be 5 per cent of the post-offer equity share capital, and the policyholder reservation portion will be 10 per cent of the offer size.

The LIC board approved a cut in its IPO issue size to 3.5 per cent from 5 per cent, the company said.

The government will now sell 20,557 crores amounting to a 3.5 percent dilution of its stake in LIC for Rs 21,000 crore, valuing the insurance behemoth at 6 lakh crore.

DIPAM secretary Tuhin Kanta Pandey said, the size for the LIC IPO is right, given the market constraints. We want to champion LIC as a long term value creator in the equity market.

The decision to list took into account market demand, stabilising market conditions. Indian markets have recovered from initial shocks, while global sentiments are weak, Indian markets are strong due to domestic flows and is the only market in the world to fuel such a large public offer, he added.

Government sources had said on Tuesday that depending on the demand and subscription at the IPO, there is an option for the government to increase the stake offer to 5 per cent, in which case the state’s coffer will garner ₹ 30,000 crore from the sale of its equity.

Previously, the government was expecting to garner over Rs 60,000 crore by selling about 31.6 crore or 5 per cent stake in the life insurance firm to meet the curtailed disinvestment target of Rs 78,000 crore in 2021-22.

India’s largest insurer LIC is likely to list on the stock exchanges on May 17, a week after its mega IPO closes.

“Valuation reported was speculative. It is neither being undervalued or overvalued. Valuation process is a discovery process. It’s embedded value is difficult to decipher even for us. This (3.5% for Rs 21,000 crore) is a fair and attractive valuation,” said Mr Pandey

The stake sale was initially planned to be launched in March 2022, but the Russia-Ukraine crisis derailed those plans as stock markets were highly volatile.

“Market demand. That’s why postponed from March. We are now seeing domestic flows. FII’s have withdrawn but domestic players have filled in,” the DIPAM secretary said.

“What is a good time? No one can actually predict the markets. We have something in the works for quite some time. It is because of the constrained situation we brought it down from 5 per cent to 3.5 per cent,” he added.

On the government’s disinvestment target, Mr Pandey said, it is not confined to one target, there are several transactions. You are relating it to the figure in the budget which considers all transactions and applying it to this.

Compared to IPO of Paytm in 2021 – which was the largest ever recently at Rs 18,300 crore, followed by Coal India (2010) at nearly Rs 15,500 crore and Reliance Power (2008) at Rs 11,700 crore, Even after the reduced size of about Rs 20,557 crore, LIC IPO is going to be the biggest initial public offering ever in India till date.