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It would not be a lie to say that the IPO of Life Insurance Corporation of India (LIC) is the most-awaited IPO of 2022. Investors have been immensely waiting for this IPO given that it has been delayed several times.
The IPO is set to open on 4th May 2022 for retail investors and 2nd May 2022 for anchor investors, according to certain media reports. For your information, anchor investors are institutional investors who invest in an IPO before the IPO opens to the public. These institutions take up shares at a fixed price and are required to invest a minimum amount of Rs 10 crores.
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These investors are guaranteed allotment for their issue and are allowed to bid on any price within the price band announced by the company. However, in case of a shortfall, they are required to pay the difference. Moreover, they are not allowed to sell these shares for 30 days after allotment.
The price band for the share has been revealed to be Rs 902-949. Moreover, policyholders will get a discount of Rs 60; retail investors and employees will get a discount of Rs 45, according to government sources.
The IPO is set to be the largest IPO in Indian history, worth Rs 21,000 crores, higher than Paytm's IPO worth Rs 18,300 crores. This values the company at Rs 600,000 crores. Around 50% of the issue is set for QIBs, 35% for retail investors, and the balance for non-institutional investors. 60% of the QIBs portion has been reserved for anchor investors.
India's largest insurer wasn't initially valued at current figures. The government reduced the valuation by half after several investors complained about the high valuations. In response, the government filed an application with SEBI to allow the company to dilute 3.5% in the IPO, instead of the mandatory 5%, which was approved last week.
Article by Aman Agarwal.
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