LIC files Draft Red Herring Prospectus with SEBI seeking approval for its IPO

State-owned Life Insurance Corporation of India (LIC) has filed a Draft Red Herring Prospectus with SEBI, seeking approval for its Initial Public Offering (IPO).

Secretary, Department of Investment and Public Asset Management, Tuhin Kanta Pandey in a tweet said, " The DRHP of LIC IPO has been filed today with the SEBI."

He further tweeted, "The IPO is a 100 per cent offer for sale by the Government of India and no fresh issue of shares by LIC."

The step has paved the way for India's largest Initial Public Offering (IPO). Possibly, after listing on the stock exchanges, LIC will topple Reliance Industries Limited to become India's most valuable listed company.

In a tweet, Mr Pandey also said, for filing valuation about 31.6 crore shares are on offer representing five per cent equity. He said, LIC has a 66 per cent market share in New Business Premiums with 283 million policies and 1.35 million agents as of March 31, 2021. The embedded value of LIC is around Rs 5.40 lakh crore.

The 65-year-old life insurer has a total equity base of 6.32 billion shares. As the public issue is filly an offer sale, which means that the proceeds will go fully towards the government and will help in to come close to its disinvestment target. In the Union Budget 2022-23, presented on February 1, 2022, the government had pegged disinvestment receipts at Rs 78,000 crore for this financial year.

As per the draft papers filed with the capital markets regulator Sebi, the Life Insurance Corporation of India has reserved up to 35 per cent of its total IPO size for retail investors. The public offer is expected to hit the capital market in March. As per the offer document, a portion of shares not exceeding 5 per cent of the offer will be reserved for employees while another portion not exceeding 10 per cent will be reserved for eligible policyholders. These are Indian citizens holding LIC policies as of the date of the draft red herring prospectus.

The pricing of the IPO will be decided in due course, two days before the opening of the public offer, according to the prospectus. It also added that policyholders and employees may get a discount compared to the price offered to the public at large.

LIC has the largest share in India's life insurance market at 64.1 per cent in terms of premium and 66.2 per cent share in terms of New Business Premiums.