LIC files draft papers for upcoming IPO: Here are the key takeaways

New Delhi: Life Insurance Corporation of India on Sunday filed the Draft Red Herring Prospectus (DRHP) with capital markets regulator SEBI. The insurer is looking to sell the Centre's five per cent equity stake in the company via its upcoming IPO, the DRHP document showed.

In an exclusive, sources told Zee Media that LIC policy holders will get great discount as the board members are in favor of maximum discount. Policyholders may get up to 10 percent under LIC Act, up to 10% on application and up to Rs 2 lakh discount provision will be announced after valuation is fixed. Discount will be mentioned in RHP Reservation quota up to 10 percent for policy holders in IPO. 

The Centre aims to offload a total of 316 million equity shares to investors through the public offering of the 6.32 billion outstanding shares, the document showed.

The Centre wishes to conclude the IPO by the end of FY22 ending March 2022.

The current fiscal FY22's divestment target was revised to Rs 78,000 crore from the Budget estimates of Rs 1.75 lakh crore and the Centre would like to cash in the LIC IPO to meet its revised divestment estimate.

The IPO drive will have a 50 per cent reservation for Qualified Institutional Buyers (QIB), not 15 per cent for Non-Institutional Investors (NII), and 35 per cent reserved for retail investors.

Big takeaways from LIC's IPO

It is going to be the biggest IPO in the country's history

Before LIC's IPO, a large number of demat accounts were opened in the country.

Reserve quota up to 10% separately for policy holders

Policy holders will get special discount

Policy number and PAN must be linked for policy holders quota

Quota and discount in IPO for employees too

Currently, HDFC Life, ICICI Pru Life and SBI Life are listed companies in life insurance.

HDFC Life's valuation up to 5 times the company's EV

Valuation of ICICI Pru Life and SBI Life up to 3 times the EV of the company