LIC IPO | Business Upturn

LIC shares at new low as market capitalization dips below 5 lakh crore

News Desk — Mon, 06 Jun 2022 06:39:35 +0000

In Monday’s morning trading, shares of India’s Life Insurance Corporation fell to a new low. LIC share price opened today at 800.25 per share on NSE. And went on to hit a new low of 786.10 per share at the opening bell. With its market value falling below 5 lakh crore to around 4.97 lakh crore.

Today’s its share price is about 17% lower than the IPO’s upper price band of $949 per equity share. Stock market experts believe that LIC shares may fall further as the anchor investors’ 30-day lock-in period expires in the middle of this month.

Saurabh Jain, Vice President — of Research at SMC Global Securities, advised positional investors to avoid discounted shopping in LIC shares “The LIC IPO had a poor listing because FII participation in the stock was almost non-existent. Aside from that, anchor investors have a one-month lock-in period. When anchor investors’ one-month lock-in period expires, more selling of LIC shares is possible. As a result, my advice to positional investors is to avoid LIC shares, as its Q4 earnings are also not encouraging.”

LIC Shares following a pattern

“The LIC share price is following a chart pattern, and my advice to new investors is to avoid taking any position in LIC shares at the current levels,” said Sumeet Bagadia, Executive Director at Choice Broking.

Bagadia made the following recommendation to long-term investors who own shares: “The LIC share price may rise to 750 levels, and those with a long-term view can hold the scrip and average on every 5-6 percent drop. However, averaging should begin around 750 levels.”

Emkay, a brokerage and research firm, announced last week. Moreover, that it has initiated coverage on the firm’s shares with a neutral view. And set a 12-month target price of $875, which is lower than the IPO issue price.

LIC IPO final day subscribed 2.95 times, government expects yield of ₹20,500 crore

Aryan Jakhar — Mon, 09 May 2022 16:00:52 +0000

According to data available with the exchanges, Life Insurance Corp’s (LIC) IPO, India’s largest initial share sale, was subscribed 2.95 times on the final day of bidding on Monday.

On the final day of the offering, investors placed orders for 2.95 times the number of shares available in India’s largest IPO. According to stock exchange data, almost 35 percent of the whole issue is designated for retail investors, and that tranche was sold 1.99 times in Mumbai.

Employees placed purchases for roughly 4.39 times the number of shares available. While LIC insurance policyholders placed orders for more than 6.12 times the number of shares earmarked for them.

Foreign institutional investors mostly avoided India’s largest share sale, finding it too costly in light of currency uncertainties and the global market environment.

While sovereign funds from Norway and Singapore participated in the anchor portion of the IPO. However, the majority of the shares went to local mutual funds.

LIC IPO “A tremendous success”

The portion which was set aside only for policyholders was subscribed nearly 6.11 times. While the reserved portion of qualified institutional buyers (QIBs) was booked 2.83 times. Whereas for non-institutional investors it was 2.91 times.

The IPO is expected to yield about ₹20,500 crore to the exchequer, Finance Ministry officials said.

“I am pleased to inform you that the offer that was started on May 4. Has closed today at 7 pm, and it has met with a tremendous success. With a good response from all categories of investors, including policy holders and retail investors”. Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM) said at a press conference.

“This long exercise that was undertaken will eventually lead to the listing of the LIC. And not only deepen capital markets. But also facilitate a large number of investors into publicly owned companies. And policy holders have also supported this exercise remarkably”. Mr. Pandey said. “Let us hope that everything goes well on the listing day”.

LIC IPO subscribed 2.94 times on last day, 16.2 crore equity shares issued

Aryan Jakhar — Mon, 09 May 2022 12:45:44 +0000

The Life Insurance Corporation of India (LIC) will close its first public offering (IPO) today. Until 05:00 p.m. today, the mega share offer had been subscribed 2.94 times its total issue size. The IPO attracted 47.57 crore shares versus 16.20 crore shares issued. According to IPO Watch, the grey market premium (GMP), or the additional price over the issue’s upper end of price range, is now trading at Rs 40. Since the IPO, it has been steadily declining.

The GMP, which peaked at Rs 85 on May 2, has since dropped by Rs 45, or 52.9 percent. Also, the initial public offering (IPO) began on May 4th. The IPO’s pricing range is Rs 902- Rs 949. With GMP currently trading at Rs 40, the stock is expected to be launched for (Rs 949 + Rs 40) Rs 989 per share. Since this is a premium of 4.21 percent over the issue price. Investors are expected to contribute Rs 21,000 crore to the insurance giant.

LIC IPO a success or loss?

The state-owned company received Rs 5,620 crore from anchor investors on May 2, indicating substantial interest ahead of the stock sale. The anchor book’s subscribers included the Norwegian wealth fund Norges Bank Investment Management and the Singapore government.

Domestic mutual fund firms such as HDFC Mutual Fund, SBI, ICICI, and Kotak also participated in the LIC anchor issue, in addition to other global funds. According to sources, around 20 investors expressed interest in subscribing to the anchor book. At the upper end of the price band, the LIC IPO was expected to raise up to Rs 5,630 crore from anchor investors.

Anchor investors will receive 59.29 million shares from the state-run insurance. Through the IPO, the government is selling a 3.5 percent stake in the insurer, or 22,13,74,920 shares.

Following the IPO, the government’s stake, which presently stands at 100%, will be reduced to 96.50%.

On May 12, 2022, the shares will be distributed. Thus, the LIC IPO’s lot size is 15 shares, with a bidding price of Rs 14,235 per share. By spending Rs 1,99,290, a retail individual investor can apply for up to 14 lots or 210 shares. On May 17, the stock is expected to be launched on the BSE and NSE.

Bank Officers Union has spoken out against the RBI’s decision to open branches on Sunday

Aryan Jakhar — Sat, 07 May 2022 06:54:18 +0000

The All India Bank Officers’ Confederation (AIBOC), the banking industry’s apex body, has objected to the RBI’s decision. To open ASBA-designated branches on Sunday, May 8, to facilitate LIC IPO subscription.

According to the statement by the AIBOC. “the subscription for the LIC IPO was opened on May 4, 2022, and on the second day of bidding the IPO is subscribed 1.03 times, with policyholders bidding for 3.11 times, staff 2.21 times, and retail investors 93%. With the closing date being on May 9, 2022 and 4 days still remaining for bidding. We fail to fathom out the reason for the RBI Notification for opening the Branches on Sunday”.

The union also questioned why the RBI is requiring them to open branches on Sunday when online subscriptions are widely used by investors.

The majority of the branches are ASBA (Application Supported by Blocked Amount) designated. Indicating that they are ready for rapid digitisation.

“Considering extensive usage of online subscription of IPO among the investors. We are of the considered view that most of the branches will not get even a single application. On Sunday in the physical format. In such circumstances, the decision to keep open all the bank branches is per se farcical. And banks cannot afford to bear such humongous expenditure”. AIBOC said in a statement.

@FinMinIndia @nsitharaman @ChairmanIba @bsindia @EconomicTimes @IndianExpress @PMOIndia pic.twitter.com/ginMJz8ya1

— All India Bank Officers' Confederation (AIBOC) (@aiboc_in) May 6, 2022

Considering all of these factors, the RBI should reconsider its decision. Also, rescind its order to open branches on Sunday, according to the union.

The Reserve Bank of India directed banks on May 4 to keep all ASBA-designated branches open. Moreover, to the public on Sunday to facilitate the processing of applications for the LIC’s initial public offering (IPO).

Therefore, the IPO of the state-owned LIC, the country’s largest-ever offering, closes on May 9.

Congress questions government on LIC IPO

Keertiman Upadhyay — Tue, 03 May 2022 10:32:59 +0000

On Tuesday, May 3, Congress criticised the government’s move to sell a 3.5% stake of the Life Insurance Corporation (LIC). The party claimed that the Centre is selling the state at a lower price than its market value.

“The intent, purpose and modus operandi of government’s desperation to list LIC IPO despite lower valuation permission to take into account key valuation indices, global uncertainties and a volatile market is deeply intriguing and highly questionable. That’s our only objection,” said Randeep Singh Surjewala.

LIC IPO is set to be open on May 4 for subscription. The government has set the price band at Rs 902- 949 a share. The policyholders & employees will get a discount of Rs 60 & Rs 45 respectively.

Congress has further asked four questions from the ruling party:

“Why was the LIC valuation of ₹12-14 lakh crore in February 2022 reduced to ₹6 lakh crore in just two months?”
“Why did the Modi government suddenly reduce the ‘valuation of LIC’ and ‘issue size’ after roadshows in India and abroad?”
“Is Modi government ignoring LIC’s key indices?”
“Why is Govt trying to sell LIC when Domestic and Global Financial Markets are in a turmoil on account of Russia-Ukraine War and a host of factors leading to economic downturn?”

LIC has accumulated over Rs 5,627 crore from anchor investors on Tuesday. LIC will be India’s biggest IPO as it plans to raise Rs 21,000 crore by selling 3.5% stake.

GIC Pte, Abu Dhabi & Norges Investment Management to anchor LIC IPO

Aryan Jakhar — Fri, 29 Apr 2022 05:00:58 +0000

Norges Bank Investment Management, GIC Pte, and Abu Dhabi Investment Authority had all committed to the LIC IPO. The IPO will be offered to anchors on May 2 and to the general public on May 4-9.

The Centre is also trying to confirm participation from international sovereign and pension funds that had expressed interest in the public offering previously. LIC, which is on track for a Rs 21,000 crore IPO, hopes to raise up to Rs 5,630 crore from anchors at the top of the IPO pricing band. For the anchor component, the company has set aside 59.29 million shares.

The price band for India’s largest IPO, which had to trim approximately 60% of its issue size due to poor market conditions, had previously been set at Rs 902-949 per share. The IPO will be the country’s largest, followed by Paytm’s One97 Communications (Rs 18,300 crore) and Coal India Ltd (Rs 18,300 crore) (Rs 15,199 crore).

LIC IPO to open on 2nd May

Aayush Agarwal — Sun, 24 Apr 2022 08:10:48 +0000

Life Insurance Corporation of India is an Indian statutory insurance and investment corporation headquartered in the city of Mumbai, India. It is currently under the incumbent and official ownership of Government of India.

LIC is set to soon open its IPO on May 2 according to sources.

LIC IPO to launch on 2nd May

The issue size is expected to be worth Rs 21,000 crore, valuing the country’s largest insurer at Rs 6 lakh crore.

The IPO was speculated to be delayed. Especially, due to the market volatility caused by the Russia-Ukraine conflict. Being the largest life insurance company in India and the fifth-largest globally. LIC’s listing on bourses is set to change many things in the Indian capital market.

3.5% instead of 5%

The Offloading was initially decided around 5%. However it is now decided to dilute 3.5% in contrast to what was decided earlier. All these decisions have been taken amid uncertainty in markets due to the current geopolitical crisis.

The 3.5 stake sale is expected to fetch Rs 21,000 crore to the government.

“LIC IPO is likely to come to the market in May first week. 3.5% stake dilution, subject to regulatory approval,” an official said. This statement had come earlier this week amid market speculations.

Sources have now confirmed the spokesperson’s statement and the IPO should open on the 2nd of May, 2022.

LIC receives SEBI approval to launch IPO

News Desk — Tue, 08 Mar 2022 20:20:10 +0000

India’s largest public offering of Life Insurance Corporation of India (LIC) has received the nod from the capital market regulator Sebi to float the mega IPO, an exclusive report from CNBC stated. The nod comes in days after several reports hinted a delay in the company’s plan to go public due to the extreme volatility in the markets. However, there is confirmation from the company or the government on the development.

The life insurer had filed the draft papers on February 13 this year with the capital markets regulator. However, there is no clarity if the government would launch the LIC IPO by March 31 as the conditions remain unfavorable to raise around Rs 75,000 crore from the markets. On the other hand, the government has to complete its disinvestment target for the fiscal year through the stake sale of LIC, which can push the government to float the IPO this month itself.

Earlier this month, few market experts had also emphasized on the valuation and pricing part of the LIC IPO. The issue should be priced lower for the retail investors to lap up and to leave something on the table, FE reported quoting market experts.

LIC appoints Sunil Agarwal of Reliance Nippon Life Insurance as CFO

Himanshu Mishra — Thu, 03 Mar 2022 15:13:54 +0000

The country’s largest insurance company LIC (Life Insurance Corporation) has appointed Sunil Agarwal as the Chief Financial Officer of LIC before listing in the stock market. Before this, Sunil Agarwal was the CFO of Reliance Nippon Life Insurance for 12 years. Before that, he has worked with ICICI Prudential Life Insurance for 5 years.

Prior to Sunil Agarwal’s appointment, Shubhangi Sanjay Soman was posted as Executive Director in Finance and Accounting (F&A) at LIC. The post of Executive Director has been changed to CFO as LIC is now preparing for listing on the stock exchange.LIC had invited applications for the post of CFO in September last year. LIC had said in a public notice that the post of CFO would be on contract with a tenure of three years or till the person concerned reaches the age of 63 years. Also, the remuneration for the post will be Rs 75 lakhs per annum.

LIC’s IPO has come under the scanner due to global tensions after Russia’s military action in Ukraine. The timeline of LIC’s IPO can be extended in view of the volatility in the stock markets after the ongoing war between Russia and Ukraine.

The size of the LIC IPO can be more than Rs 66,000 crore. LIC has filed a draft paper with SEBI and it is believed that in the first week of March itself, LIC will get approval from the market regulator to bring IPO.

Cabinet likely to accept proposal to permit FDI in LIC tomorrow: Report

Himanshu Mishra — Fri, 25 Feb 2022 16:51:37 +0000

The Union Cabinet will possibly accept the plan to permit foreign direct investment (FDI) in Life Insurance Corporation of India (LIC) tomorrow, an action that will facilitate foreign funds to join in the forthcoming IPO of the state-owned insurance behemoth.

The decision is anticipated at the conference of the Union Cabinet and the Cabinet Committee on Economic Affairs (CCEA), which is slated for tomorrow, according to reports.

It is suggested that a special provision may be encompassed in the Consolidated FDI Policy for FDI in LIC, the sources explained. Since the FDI ceiling for public sector banks is 20 percent on the approval route, a related limit may be maintained for FDI in LIC. But the government may assume to keep FDI in LIC under the mechanical route so that the capital raising method may be accelerated, although the final ruling will be taken by the cabinet only.

As per the recent FDI policy issued by the Department for Promotion of Industry and Internal Trade (DPIIT), foreign investment is authorized in “insurance companies” and “intermediaries or Insurance intermediaries.” Since LIC is neither a firm nor an intermediary, it is not enclosed by either. Further, no provision of FDI under either the LIC Act, 1956 or the Insurance Act, 1938 or the restrictions has been made. Even the Insurance Regulatory and Development Authority Act, 1999 doesn’t have such conditions.

LIC IPO can disturb market balance: Jefferies

Himanshu Mishra — Wed, 23 Feb 2022 16:46:01 +0000

Jefferies India speculates the upcoming initial public offer (IPO) of Life Insurance Corporation, noted as the largest ever issue in the nation, has the possibility to disrupt the market balance.

The insurance behemoth has arranged a draft paper for its share deal with the market control. The market is anticipating authorization soon and public bidding will likely start by mid-March. The government, which accepts the entirety of stake in the company, is keen to complete the sale by the end of this financial year even after adverse markets.

“Heavy foreign selling has been consumed by strong domestic buying, smoothening the market effect. Potential LIC IPO (estimated at $5-7 billion) can disrupt this equilibrium,” Mahesh Nandurkar, a critic at Jefferies said. He put in that, hence, it was a near term risk for the market.

Foreign investors have been clumsy in India for a while now. In the existing calendar year, they have revoked about Rs 52,500 crore from equities, data available at NSDL shows. This is possibly due to the surging dollar and dipping liquidity globally.

“The ample global liquidity scenario is even now under threat as high inflation is prompting policy reversals,” Jefferies announced. “The US Fed will end its QE in March and our US economist thinks that seven rate hikes of 25 bps are potential in 2022, followed by four in 2023.

Inflation has also flooded in India, exceeding the tolerance level specified for the Reserve Bank of India. It is probably set to rise further given the US dollar is trembling at $100 per barrel. But, the central bank has shown little preference to raise interest rates or boost financial tightening.

The global broker announced this stance probably puts the RBI behind the curve. But the central bank’s belief may differ very soon, it inferred.

“We note that helpful policy rates have already been shifted 50 bps higher than the 3.35 per cent reverse repo rate. However, RBI’s prolonged pause on headline rates and a surprisingly short CPI forecast for FY23 has sold the RBI a few months of time,” announced Nandurkar.

Going ahead with the buzz in market for LIC IPO: FM Sitharaman

Sathvika Chelakani — Tue, 22 Feb 2022 13:26:02 +0000

The government will proceed with the upcoming initial public offering (IPO) of the state-run insurance giant LIC, Finance Minister Nirmala Sitharaman said on February 22, despite concerns about the potential fallout from Russia-Ukraine tensions.

“There is a lot of buzz in the market, and there is a lot of interest in the LIC IPO. We’re going ahead with it,” FM Sitharaman stated. She did, however, add that “we are equally concerned if the market situation is conducive.”

On February 13, the draft red herring prospectus for the LIC IPO was made public. The offer is for the sale of up to 316.25 million shares, or about 5% of the Centre’s holdings in the Life Insurance Corporation of India.

The release of the DRHP, according to Sitharaman, has heightened interest in the LIC IPO. “I think the way it’s put together has piqued people’s interest,” she added.

Since February 21, Sitharaman has been in Mumbai for a two-day visit, meeting with stakeholders from the industry, trade, and financial markets. The Union Budget for the fiscal year 2022-23, which was recently passed, was the topic of discussion.

The finance minister’s press conference comes at a time when the fragile situation in eastern Europe has sent markets around the world into a frenzy. Oil prices have skyrocketed, surpassing $99 per barrel earlier in the day.

In response to a reporter’s question about whether the government would consider tax relief in light of rising crude prices, Sitharaman stated, “Crude oil is in a worrying situation, with all of these headwinds on the crude. We actually stated that we wanted a diplomatic solution to the situation that is developing in Ukraine. It is one of the most crucial considerations. We’ll have to wait and see how things go. We’re keeping an eye on Brent.”

The finance minister noted that the Centre had already reduced fuel taxation beginning in October of last year in an effort to lower domestic fuel prices.

LIC’s mega IPO value can secure stock’s entry into Nifty50 & other indices: UBS

Himanshu Mishra — Wed, 16 Feb 2022 12:36:51 +0000

The highly-anticipated public offer by the Life Insurance Corporation Of India (LIC) by which the government could generate ₹65,000 crore- ₹75,000 crore by selling a 5% stake, will build a large enough free float for the stock to be incorporated in mainstream indices such as Nifty50, according to UBS Global Research.

“LIC would be the third-largest stock in India by market cap, and the 32nd-largest by free float, assuring an entry into mainstream indices, e.g., Nifty-50,” asserted a report by UBS Global Research dated 15th February. The large share sale will assess the market longing at a time when the stock indices are unstable due to the Ukraine crisis, high crude prices, high US inflation and anticipated Fed rate hikes and so on.

However, if it goes through, the listing may garner sharp valuations, believe experts. Amongst factors that continue to be favourable and will attract large investor interest contain the fact that LIC garners a large share of household savings. UBS data indicates that LIC gets lead over SBI’s deposits — the successive biggest destination for household savings in India.

LIC is the biggest and oldest life insurer in India and dominates with the bulk of the market share. The firm is also seeing increased competition from private insurers, who are also earning market share thereby presenting strong competition for LIC. However, amongst the factors favourable for LIC however the fact that LIC has over 50% share of the trade agent pool and LIC agents have the highest productivity indicates UBS data.

Analysts at Jefferies India Pvt Ltd in their report dated 16 February announced that “LIC accounts for 60% plus of life insurance fresh premiums and 40% of retail APE (annual premium equivalent), run mostly by its industry-leading agency force of 1.34 million and it moreover has 72 Banca partnerships.” A bancassurance partnership is an agreement between a bank and an insurance firm for the sale of policies.

Analysts at Haitong Securities asserted that LIC’s true P&L Profit Potential can be 10x of Its Reported Figure. They asserted that the LIC’s noted a Net profit of Rs2900 Crore in FY21 despite organizing a very large AUM of Rs35 Lakh crore as of March’21. In their viewpoint, this reported net profit is highly understated and does not show the true earning capability of LIC.

IRDAI approves draft papers for LIC IPO, DRHP filing with SEBI likely to be tomorrow: Report

Himanshu Mishra — Thu, 10 Feb 2022 05:16:21 +0000

According to a report by CNBC TV18, the Insurance Regulatory & Development Authority of India has passed LIC’s proposal for an initial public offering (IPO). The IPO proposal was cleared by IRDAI in its board meet yesterday. The LIC DRHP filing with SEBI is presently likely to happen tomorrow, i.e on February 11, 2022. The quantum of divestment is not mentioned in LIC’s proposal to the insurance regulator. It is expected to be cited in DRHP with embedded value numbers.

The government intends to keep a portion of IPO for LIC policyholders, who could also receive discounts as the government wishes to rope in a larger section of retail investors. Likewise, the government is in the procedure of approving a 20 per cent foreign investment barrier in LIC to rope in foreign investors to make the IPO a tremendous success. The IPO is predicted to arrive in markets by mid-March.

Actuarial firm Milliman Advisors LLP India has figured out the embedded value of LIC, while Deloitte and SBI Caps have been elected as pre-IPO transaction advisors. Under the embedded value procedure, insurance companies’ present value of future profit is also comprised in their present net asset value (NAV).

The government has elected 10 merchant bankers, comprising Goldman Sachs (India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd, to regulate the mega IPO of the country’s biggest insurer.

The much-awaited LIC IPO is predicted to be the greatest ever witnessed by the country. LIC’s IPO may help the government achieve its revised divestment mark of Rs 78,000 crore, down from the initial mark of Rs 1.75 lakh crore. So far this financial year the government has arranged to raise Rs 12,000 crore from divestment receipts.

LIC partners with Policybazaar for widening customer reach digitally

Himanshu Mishra — Thu, 03 Feb 2022 16:31:50 +0000

The insurance giant LIC on February 3 declared a tie-up with insurance aggregator Policybazaar.com to increase the reach of its products.

“LIC, the country’s pioneer in life insurance and Policybazaar.com have joined hands to offer a wide range of term and investment products to consumers,” a joint statement announced, further putting that this partnership has been formally launched from today onwards.

“Policybazaar’s digital distribution channels will further help in accelerating insurance awareness and penetration across the length and breadth of India,” the statement further explained. The tie-up aims at facilitating seamless digital distribution of life insurance products across the nation.

Policybazaar’s Chief Executive Officer Sarbvir Singh told the tie-up is founded on the strategic goal to widen our reach, primarily in the smaller cities to ensure financial inclusion and social security.

Singh further explained that LIC has spearheaded the life insurance sector in the country and so this partnership will provide an amplified extent to people. He also said, “We are delighted to partner with them and look forward to providing protection to people across age groups, demographics and locations.”

However, it is the first time that the Life Insurance Corporation of India has got into a partnership with a private insurance aggregator to widen its footprint. The insurance sector guardian has so far depended on its vast resource of over 1.3 million agents to expand its customer base.

LIC likely to file IPO papers between Feb 8-10: Report

Sathvika Chelakani — Wed, 02 Feb 2022 06:10:49 +0000

According to a report published by Financial Express, the draft red herring prospectus (DHRP) or offer document of the Life Insurance Corporation’s (LIC) is likely to be filed between February 8 to February 10 – sources told FE. The Finance Minister Nirmala Sitharaman said in her Budget speech that LIC IPO is expected shortly.

Nirmala Sitharaman had, days before Budget 2022 presentations, calculated the progress of the initial public offering (IPO) of LIC in a meeting that included the top official of the ministry. The government had also recently stretched the tenure of LIC chairman MR Kumar by one year with a view to facilitating the smooth listing of the insurance behemoth. Kumar will reportedly continue as chairman of LIC till March 2023.

The Indian government has urged the market regulator-SEBI to complete its vetting process in less than three weeks instead of the 75 days it usually requires.

The government holds a 100% stake in LIC. Once listed, it is likely to become the country’s biggest company by market capitalization with an estimated valuation of ₹8-10 lakh crore.

LIC IPO is significant for meeting the ₹1.75-lakh crore disinvestment target set for the current fiscal year ended in March 2022. Till now this fiscal, ₹9,330 crore has been mopped up through PSU disinvestment.

The Prime Minister had in September last year, appointed 10 merchant bankers, including Goldman Sachs ( India) Securities Pvt Ltd, Citigroup Global Markets India Pvt Ltd and Nomura Financial Advisory and Securities (India) Pvt Ltd to manage the mega initial public offering of the country’s largest insurer LIC.

According to SEBI rules, foreign portfolio investors (FPI) are permitted to buy shares in the public offer. However, since the LIC Act has no provision for foreign investment, there is a need to align the proposed LIC IPO with SEBI norms regarding foreign investors participation.

LIC IPO unlikely to take place this financial year: Report

News Desk — Sun, 19 Dec 2021 10:34:22 +0000

The Union government is unlikely to come up with the IPO of Life Insurance Corporation (LIC) in the current FY2021-2022, as there are some issues pertaining to the valuation of the company which is taking more time.

“Even after the valuation, there are several regulatory processes that the insurance behemoth had to pass. The initial public offering (IPO) requires vetting not only by the Securities and Exchange Board of India (SEBI) but also by the Insurance Regulatory and Development Authority (IRDA) that has been headless for almost seven months”, said a senior LIC official on condition of anonymity.

He further added that the valuation is a difficult process because of the size of the company, assets under management, subsidiaries and its profitability sharing structure, and the size of share sale that depends on its valuation. In July, the Cabinet Committee on Economic Affairs (CCEA) gave its in-principle approval for the listing of LIC. The government is banking upon LIC’s listing to meet its disinvestment target.

To list LIC, the government made about 27 amendments to the Life Insurance Corporation Act, 1956. One of the amendments states, that post IPO the government will hold a 75 per cent stake in LIC for the first five years and later hold at least a 51 per cent stake after five years of the listing.

Once listed the insurance behemoth is likely to become of the biggest companies in terms of market capitalisation with an estimated valuation of INR 8-10 lakh crore.

LIC IPO: Government invites bids again for legal advisors

News Desk — Fri, 03 Sep 2021 14:54:07 +0000

On September 2, the government, for the second time sought bids for legal advisors for the listing of Life Insurance Corporation (LIC), which is expected to be the largest public offering in Indian history. In a notice, the Department of Investment and Public Asset Management (DIPAM) said the last date for the bids is September 16.

Insufficient interest was seen during the previous attempt as per the government. “Considering insufficient demand received in the first RFP, it has been decided to issue a fresh RFP on the above subject,” the notice said. DIPAM Secretary Tuhin Kanta Pandey recently said he expects the LIC listing to take place in the current fiscal year (2021-22).

During the Budget speech for FY22, the government announced an ambitious divestment target of Rs 1.75 lakh crore. In which most of this amount is expected to be mopped up through the LIC IPO and privatization of a number of companies including Air and Bharat Petroleum Corporation (BPCL).

Goldman Sachs, JP Morgan, Citigroup, Nomura, Bank of America Securities, JM Financial, SBI Caps, Kotak Mahindra Capital, ICICI Securities, and Axis Capital will manage the IPO. They will form a syndicate and advise DIPAM on the timing and floor price for the IPO.

The merchant bankers will also structure the IPO, conduct due diligence, prepare the draft red herring prospectus, and conduct pre-market surveys and roadshows. Besides merchant bankers, the government has sought bids for appointing a legal adviser, advertising agency, registrar, and share transfer agent for LIC’s public offer.

IPO bound LIC’s Chairman post removed, replaced by CEO and Managing Director

Bhomik Mathur — Thu, 08 Jul 2021 13:04:47 +0000

In a new set of amendments, the government of India has now removed the Chairman’s position in the state-owned Life Insurance Corporation of India(LIC). The Chairman will now be replaced by a Chief Executive Officer and a Managing Director. The changes are being made in line with the government’s intention to get the insurance giant listed on the stock market. The LIC’s Initial Public Offering(IPO) is likely to be released in the current fiscal year.

For this purpose, changes have been made to certain provisions under the LIC Act, 1956 including the Life Insurance Corporation of India(Employees) Pension(Amendment) Rules. A gazette notification issued on Wednesday stated that “Chief Executive and Managing Director means the Chief Executive Officer and Managing Director appointed by the Central Government under section 4 of the Act (LIC Act 1956)”.

Of late, several amendments have been made by the finance ministry under FM Nirmala Sitharaman with regards to LIC. Recently, the ministry gave its approval to the LIC to raise its authorised share capital to Rs 25,000 crore. The Department of Economic Affairs has also bought amendments to the Securities Contracts(Regulation) Rules, allowing companies having a market cap. of greater than 1 lakh crore to sell only five per cent of their shares. However, these companies will be required to sell 10 per cent and 25 per cent of their shares in the stock market in two and five years respectively.

Established as an insurance firm by the government of India in 1956, the Life Insurance Corporation of India(LIC) enjoys a whopping 60.77% market share in the Indian insurance sector as of March 2021. The Modi government had announced disinvestment of the LIC in its 2021-22 budget.

Upcoming IPOs in India 2021, read to know more

Ushma Ghosh — Sat, 20 Feb 2021 07:37:59 +0000

The IPO market is expected to see a variety of major big releases because of the strong market momentum that guided Sensex and Nifty to record highs in 2021.

Sixteen initial public offers (IPOs) hit D-Street in CY2020, from which 15 were launched in the second half of the year. Coming to 2021, investors will get to see a string of IPOs, given the recovery in the market and companies looking to raise funds following a subdued year, marred by the pandemic. With the economy making a recovery post-pandemic, here is a look at some of the upcoming IPOs of 2021 that investors should keep an eye on, however, before that here’s a glimpse for the new investors revolving around how an IPO works and what is an IPO.

What is an IPO?
The initial public offering (IPO) is a process by which a private company becomes a publicly-traded company by offering its shares for the first time to the public.

How to apply for IPOs?
Nowadays, it has become simpler to register for an initial public offering, because of the online registration process. In India, most national banks and popular stock brokers provide facilities for online IPO applications. An investor must open a Demat account or a trading account with the brokerage institution that provides IPO service in order to apply online.

IPOs Listed in 2021

Issuing Company	Issue Price (Rs per share)	Listing Premium/Discount
IRFC	Rs 26 per share	-4.23%
Indigo Paints	Rs 1,490 per share	75%
HFFC	Rs 518 per share	19%
Stove Kraft	Rs 385 per share	21-29%

Major Upcoming IPOs to Watch in 2021:

Life Insurance Corporation of India (LIC)
In the 2021 Union Budget, finance minister Nirmala Sitharaman confirmed that the IPO of the Life Insurance Corporation of India (LIC) will be completed in 2021. Minister of State for Finance said that up to 10% of the LIC IPO issue size will be reserved for policyholders. It is reported that the government is aiming to collect funds to the extent of 80,000 crores through this IPO. The path seems to be clear for an IPO by India’s largest institutional investor, whose public offer, as per some analysts, will be the biggest in India’s history.
Lodha Group
The Mumbai-based Macrotech Developers, formerly known as Lodha Developers, on February 16, filed a draft red herring prospectus (DRHP) for its proposed Rs 2,500 crore IPO with capital market regulator SEBI.
PolicyBazaar
India’s largest insurance aggregator is set to launch a Rs 4,000-crore initial public offer (IPO). As per sources, the Gurugram-based company has invited proposals from at least eight investment banks for the proposed IPO. Policybazaar plans to secure nearly $250 million in a $2 billion-plus valuation funding round before an initial public offering in September 2021. Info Edge being an early investor, Policybazaar was founded in 2008. With more than 90% market share, Policybazaar is the biggest online insurance firm in India.
Arohan Financial Services
The Kolkata-based microfinance lender has filed a draft red herring prospectus (DRHP) for its IPO with an issue size of around Rs 1,750-1,800 crore.
Seven Islands Shipping
The Mumbai-based company has filed papers with SEBI for a Rs 600 crore IPO.
Nykaa
The beauty startup is planning an, on a valuation of $3 billion. The startup founded by Falguni Nayar is conducting deliberations that could soon pay for a market sale.
Kalyan Jewellers
The Kerala-based retail jewellery firm is all set to hit the market with a Rs 1,750-crore initial offering. The firm, backed by Warburg Pincus had received SEBI’s approval in October 2020. Kalyan Jewellers is planning to raise around Rs 1,750 crores through its IPO. The IPO is set to offer a fresh equity issue of 1000 crores. The company has posted operating sales of 10,181 crores, up from 9,814 crores in the last financial year.
Bajaj Energy
One of the largest thermal generating firms in the private sector, Bajaj Energy, whose operations are based in UP, is expected to launch an IPO of Rs 5,450 crore of which Rs 5,150 crores would be a fresh issue. The issue date is yet to be announced. Bajaj power ventures promoter is providing 300 crores of scrips. The Promoters of this company are Shishir Bajaj, Minakshi Bajaj, Kushagra Bajaj and ApoorvaBajaj Bajaj Energy Limited is one of the largest thermal generating firms in the private sector in Uttar Pradesh.
Zomato
The food delivery startup backed is expected to launch an IPO in the first half of 2021. Zomato had also acquired Uber Eats during FY20 to become the business leaders in the delivery industry. It is speculated that Zomato is looking for an IPO by June this year, valuing the firm on the stock sector at $6-8 billion. The Ant Group once held a 25-26% stake in Zomato. The Economic Times announced that current investors Tiger Global, Kora Investments, Steadview, Fidelity, Bow Wave, Vy Capital and new sponsor Dragoneer Group will participate in the funding round.
Paytm
The leading payments company, founded in 2010 is likely to launch its IPO this year. Softbank, Ant Financials, T Rowe Price and Discovery Capital are the main investors. Ant Financials is the largest investor with a 40% stake in the firm. The business has 150-200 million daily users and it is scheduled to go public soon. Digital payments are at a significant milestone in India, with mobile payments dependent on UPI is expected to increase to over 60% of CAGR over the next five years.

Apart from these other IPOs that are in focus are Barbecue Nation Hospitality, Ola, Byjus, Delhivery, Suryoday Small Finance Bank, Laxmi Organic Industries, Craftsman Automation, Apeejay Surrendra Park Hotels, Shyam Steel, Annai Infra Developers, SAMHI Hotels and Studds Accessories.

Upcoming IPOs in 2021

IPO	Tentative Issue Size (in Rs Crores)*	Tentative Date*
Nureca	100	Feb 15-17
LIC	70,000	2021-22
Nykaa	—	2021-22
RailTel	700	Feb 16-18
Kalyan Jewellers	1,750	January to March 2021
Bajaj Energy	5,450	2021
Studds Accessories	450	February 2021
Suryoday Small Finance Bank	400	2021
Laxmi Organic Industries	800	—
Craftsman Automation	150 +	—
Barbecue Nation	1,000-1,200	2021
Apeejay Surrendra Park Hotels	1,000	2021
Shyam Steel	500	2021
Annai Infra Developers	200-250	2021
*Both, the issue size and date, is tentative and might vary once the issue goes live in the markets.

(Data table source: Groww)

SEBI eases minimum public offer norms, paving way for LIC’s mega float

Devanshu Singla — Thu, 18 Feb 2021 07:04:27 +0000

Markets regulator SEBI has approved a slew of proposals, including relaxing minimum public offer requirements and amending norms for portfolio managers.

The government is betting on reducing its stake in state-run LIC through an IPO in the next fiscal year in an attempt to raise enough non-tax revenues to narrow the country’s fiscal deficit.

“For issuers with post-issue market capital exceeding Rs 1 trillion, the requirement of the minimum public float will be reduced from 10 per cent of post-issue market capital (existing provision) to Rs 10,000 crore, plus 5 per cent of the incremental amount beyond Rs 1 trillion. These issuers shall be required to achieve at least 10 per cent public shareholding in two years and at least 25 per cent public shareholding within five years from the date of listing,” SEBI said in a release.

Under the formula, a company with a post-issue market cap of Rs 2 trillion will have to divest a minimum of 7.5 per cent, instead of 10 per cent.

At present, companies with a post-issue market capital of ₹4,000 crore or more are required to offer at least 10% of the capital to the public in the IPO. Further, such issuers are also required to achieve a minimum public shareholding (MPS) of at least 25% within three years from the date of listing.

This amendment too will particularly help LIC since its size is so large that the market may find it tough to absorb equity papers worth even 5% of LIC in the further public issues that the insurer will need to launch to comply with SEBI’s public shareholding norms post its IPO.

LIC, which is preparing for its IPO and is currently undergoing an evaluation process by actuarial firms, will be the biggest beneficiary of this relaxation by SEBI.

Besides, the regulator cleared repealing of SEBI (Underwriters) Regulations, 1993 and amendments to the SEBI (Merchant Bankers) Regulations, 1992 and the SEBI (Stock Brokers) Regulations, 1992.

Continuing efforts to further the ease of doing business in the country, the watchdog’s board also gave its nod for merger of SEBI (Regulatory Fee on Stock Exchanges) Regulations, 2006 with Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2018, according to a release.

Up to 10% of LIC IPO to be reserved for policyholders: MoS Finance Anurag Thakur

Chirag Jha — Tue, 09 Feb 2021 11:56:40 +0000

Up to 10 per cent of the LIC IPO issue size would be reserved for policyholders, Minister of State for Finance Anurag Thakur said on Tuesday.

The government will remain the majority shareholder and will continue to retain management control safeguarding the interest of policyholders, he said.

“In the Finance Bill 2021-22, it has been proposed to have a reservation on a competitive basis, to an extent of up to 10 per cent of the issue size, in favour of life insurance policyholders of LIC,” Thakur said in a written reply to a query in the Rajya Sabha.

In her Budget Speech 2021, Finance Minister Nirmala Sitharaman said the initial public offering (IPO) of Life Insurance Corporation (LIC) would be launched in the next financial year, beginning April 1.

The LIC Amendment Act has been made part of the Finance Bill, thereby bringing the required legislative amendment for launching IPO of the country’s largest life insurer.

The Department of Investment and Public Asset Management (DIPAM), which manages the government’s equity in state-owned companies, has already selected actuarial firm Milliman Advisors for ascertaining the embedded value of LIC.

The Budget 2021-22 has set a disinvestment target of Rs 1.75 lakh crore, higher than the Rs 32,000 crore estimated to be garnered in the current fiscal. Of the Rs 1.75 lakh crore, Rs 1 lakh crore is to come from selling government stake in public sector banks and financial institutions, and Rs 75,000 crore would come as CPSE disinvestment receipts.