Bharat SainiLast Updated on April 27, 2022 by Bharat Saini
LIC IPO is the largest IPO in India, with a valuation of around Rs 5.4 lakh crore expected. This IPO will have a reduced issue size, from five per cent to three percent, making it easier for smaller investors to invest in the IPO. Learn how to invest in LIC IPO in this article. All details are provided below.
Read on to find out how much you can invest in LIC IPO.
LIC IPO valuation expected to be around Rs 5.4 lakh crore
The LIC IPO will be the largest insurance issue in India with an expected market value of Rs 6 lakh crore, or approximately 1.1 times the company’s embedded value as at December end. In its previous IPO, the company had been valued at around Rs 12-13 lakh crore, but the government slashed the valuation to 6 lakh crore, bringing it in line with market expectations. The IPO is expected to launch in May, with anchor investors placing bids on May 2. LIC policyholders will get a discount of 60 per share while retail bidders will be offered a discount of 45 per share.
While it was originally planned to list the company in March, the Ukraine-Russia conflict froze the market. Meanwhile, higher interest rates globally and inflation have led to an increase in volatility in the stock market. While a cut in valuation could help the government balance the market for first-time investors, the timing of the LIC IPO is still uncertain. In addition, many policyholders have opened demat accounts in anticipation of the public offer.
The LIC IPO is expected to be launched in the fall. The company will sell a fifth of its shares at a valuation of about Rs 5.4 lakh crore. The issue will be open to institutional and retail investors. A large portion of the shares will be reserved for anchor investors. The government hopes to raise Rs 60,000-70,000 crore from the sale of a 5% stake in LIC.
In addition, LIC has an unmatched market share in India. No other life insurance company in the world has such a sizeable market share. This is one of the reasons why the company has been valued at around Rs 13 lakh crore. This means that the IPO is likely to attract large participation from investors and offer a premium listing. In other words, LIC’s IPO valuation is more realistic than what it would have been in the past.
The LIC IPO is set to open on May 4 and close on May 9. The company will offer 3.5 per cent shares to retail investors, which will fetch the government about Rs 21,000 crore. LIC is 100 per cent government owned, but the government has cut down the IPO size by 5 per cent due to the ongoing war in Ukraine. If this does happen, LIC will be the largest IPO in the world.
The government has already cut down the issue size by Rs 65,000 crore as the situation has gotten worse. However, it still has time to launch the IPO without filing fresh papers with the Sebi. According to sources, the government is weighing whether to proceed with the IPO in May or wait until the geopolitical situation clears up. This would allow the government to better price the IPO so that the insurer will be able to sail through the IPO without problems.
IPO issue size reduced from 5 per cent to 3.5 per cent
The LIC IPO issue size has been reduced from five per cent to 3.5 percent. The government had initially planned to reduce the issue size to 5%. The IPO is expected to hit the floor in the first week of May. The government hopes to raise Rs 21,000 crore from the IPO. While the IPO issue size is expected to fall from five per cent to 3.5 percent, there is a possibility that the IPO will be even smaller.
The government has decided to proceed with the LIC IPO despite the setback. The recent war in Ukraine and the volatility in the markets are not expected to improve anytime soon. Postponing the IPO is unlikely to improve the situation for the company any time soon. Additionally, other market issues, such as high oil prices and inflation, are unlikely to go away anytime soon. The LIC has not yet responded to questions Business Standard has emailed.
The LIC board has agreed to the 3.5 percent IPO issue size. Under the deal, the government will sell 3.5 percent of LIC shares for Rs 21,000 crore. The deal is subject to the approval of the capital markets regulator. If the government gets its regulatory approval, the IPO issue size can increase to five per cent. This move would raise Rs 30,000 crore in funds for the government’s budget.
A DPIIT press note included FDI policy changes that would allow large foreign portfolio investors to subscribe to LIC shares. The FEMA notification was required to operationalise the changes in the LIC FDI policy. Through this rule change, foreign portfolio investors will be able to purchase shares in LIC at up to 20 per cent FDI through the automatic route.
The government has also agreed to reduce the LIC IPO issue size to 3.5 per cent from five per cent. However, a major stumbling block remains the Government’s stake in the company. Although the IPO size is expected to be reduced, the LIC will still be valued at more than six lakh crore after the IPO. The government may dilute its equity stake in the company through follow-on public offerings or other means.
The IPO issue size will be smaller by three percentage points to 3.5 per cent. The Anchor Investor Portion will not be more than 50 per cent, while the Retail Investor Portion will be up to 35 per cent. The LIC is also offering the Policyholder Reservation Portion, which is a discount for LIC policyholders. Moreover, the Policyholder Reservation Portion will be available to all LIC policyholders at the cut-off price.
Steps to invest in LIC IPO
You must first open a DEMAT account in order to invest in IPOs. TradeSmart is a leading broker in India that offers the most competitive brokerage fees. Once you open a DEMAT account, you can invest in equity with the highest profits. If you are a new investor, you can sign up for a free demo account at TradeSmart. To invest in LIC IPO, you must follow the steps mentioned below.
Sign up for an account with LIC and log in to the LIC website. Fill in the required details – your date of birth, gender, PAN, email address, and PAN. You should also link your Aadhaar number to your PAN before investing in LIC IPOs. Once you have successfully verified your details, you can buy LIC IPOs. You can also invest in other companies listed on the stock exchange.
Apply for a policy. All types of LIC policyholders can apply for the IPO. In addition to this, the LIC has reserved a certain percentage of its issue size for policyholders. After you have registered, fill out the online form to buy shares. Once you have completed the registration process, you will be directed to a verification page where you can enter your PAN number and CAPTCHA code.
Open a Demat account with your broker. You can also invest online in LIC IPOs. LIC IPOs are expected to launch at a price of between Rs 1500 and Rs 3200, depending on the issue price. The price range for the IPO will be announced after the IPO is released. Institutions and investors are closely monitoring the process as the IPO is slated to be the largest ever in India. The company contributes to the Indian economy and GDP.
PAN card details: You must link your PAN with your existing LIC policy. This is the first step in investing in LIC IPO. LIC has a separate reservation quota for policyholders in its IPO. You can apply for IPO benefits and discount. This way, you can get in on the biggest IPO in India. Then, follow the steps laid out below. You should be able to invest in LIC IPO before it closes. It will be worth it if you invest in this great stock.
LIC is expected to list on the stock exchange in January-March 2021. Listed companies like Amazon, Walmart, and eBay will be competing for investors’ money. The government has closely followed the process. The IPO is expected to raise as much as Rs. 80,000 to one lakh crores. As of now, the company is preparing its financial statements for the DRHP, which will be submitted to the regulators in April.
