Zerodha (Trading Account)
FREE Equity Delivery and MF
Flat ₹20/trade Intra-day/F&O
Zerodha (Trading Account)
FREE Equity Delivery and MF
Flat ₹20/trade Intra-day/F&O
|
|
Published on Friday, July 31, 2020 by Chittorgarh.com Team | Modified on Wednesday, December 1, 2021
LIC is planning to bring an IPO to sell 10% of its stake and get listed at BSE and NSE stock exchanges. This fast track IPO is part of the disinvestment of government stake in LIC. The government of India is planning to raise funds between Rs 80,000 to 1 lakh crore through this IPO.
The LIC policyholders may have a 10% reservation in the LIC IPO. The PAN Number will be used as the identifier for policyholders.
If you are a LIC policyholder and would like to apply in the reserved category, click here to update the PAN Number on your policies online now.
The LIC IPO 2020 offers a great opportunity to retail investors and employees to invest in the company for the long term as well as making quick listing day gains. It is also speculated the LIC Policy Holders may get a reserved quota in this IPO.
In the Union Budget speech for 2020-21, Finance Minister Nirmala Sitharaman had said:
Listing of companies on stock exchanges disciplines the company and provides access to financial markets and unlocks its value. It also gives an opportunity for retail investors to participate in the wealth so created. The government now proposes to sell a part of its holding in LIC by way of Initial Public Offer (IPO).
Topics
Note:
LIC has not filed the DRHP as of Aug 2020. All information on this page is based on the LIC IPO news available in the public domain and information gathered by our journalists through their sources. We will keep posting you with the latest updates on LIC IPO on this page.
|
Issue Open Date |
Expected in FY 2020-21 |
|
Issue Close Date |
Expected in FY 2020-21 |
|
Issue Type |
Book Building Offer |
|
Price Band |
Rs [.]to Rs [.] per share Employee Discount: [.] |
|
Minimum Lot Size |
[.] |
|
Face Value |
[.]each |
|
Issue Size |
Rs 80,000 to Rs 1,00,000 crore* [Tentative] |
|
Book Running Lead Managers |
- |
|
Registrar |
- |
|
Book Building Proportion |
Employee Reservation : [.] shares QIB (50%) : [.] shares NII (15%) : [.] shares Retail (35%) : [.] shares |
LIC IPO is one of the most eagerly awaited IPO of the decade and all are keen to know of its launch date. As per the budget announcement, the IPO is likely to be launched in the second half of FY 2020-21.
The process that was slowed down due to the pandemic has now kick-started in full swing. The government has finalized Deloitte as the pre-initial public offer (IPO) transaction advisors. There is still a lot of work to be completed in the pre-IPO phase and we will have to wait for the dates to be announced.
The government is expected to sell not more than 10% of its stake in LIC. The rough estimates of valuation done by analysts vary between Rs 8 lakh crores to Rs 11 lakh crores. Considering the government sells 10% of its stake, the IPO size can be expected to range between Rs 80,000 to 1 lakh crore. Though this is based on estimates we may have to wait for actual valuations to be done which is going to be a mammoth task.
The price band for IPO can be determined based on the actual valuation and the existing share price of the competitors in the insurance industry. The issue price is usually announced one week before the issue opens for the public for subscription.
Various analysts have provided rough estimates on the valuation of LIC to be between Rs.8 lakhs to 11 lakhs crores. However, the government will need to arrive at the actual value of LIC before filing DRHP.
The process to determine the actual valuation of LIC is going to be a tough task considering the giant size of the company. It will need a team of professionals with sound knowledge of the insurance industry.
Amidst all the mixed opinions whether the decision to disinvest LIC is good or bad, LIC IPO has below benefits to offer:
|
Date |
Event |
|---|---|
|
Feb 01, 2020 |
Govt proposed LIC IPO in Union Budget for 2020-2021. |
|
Jul 29, 2020 |
Deloitte is selected for pre-IPO transaction advisors. |
Life Insurance Company of India (LIC) is the oldest and largest 100% Government of India owned insurance company formed by the LIC Act 1956. LIC has been treasuring the trust of Indians for the last 63 years and strives to meet its slogan of 'Your welfare is our responsibility' in every possible way. Started with an initial capital contribution of Rs 5 crores from the government, today the asset-value of LIC has reached over Rs 31 lakh crore.
The government of India is diluting its partial stake in LIC by launching the IPO and inviting the public to participate in its equity.
With the launch of LIC IPO and listing, LIC will come under a direct scanner of SEBI and will have to comply with requirements for listed firms. This will enhance the transparency of LIC operations and strengthen overall corporate governance.
LIC IPO has been targeted to launch in the second half of the fiscal year 2020-21
The government has set the ball rolling to launch the IPO as soon as possible and preparations have started in full swing. An IPO process generally takes four to six months. Considering the pre-IPO process has started now, we need to wait and watch if the government can meet the targeted launch period.
To apply for LIC IPO through Zerodha, you need to have an account with Zerodha. The IPO will be available on the Zerodha website to apply when it's open for subscription.
Steps to apply for LIC IPO through Zerodha:
This will block the bid amount in your bank linked to the UPI app and the application will get submitted to exchange.
LIC IPO is likely to come in the second half of the financial year 2020-21. The pre-IPO process has started and advisors have been engaged to assist LIC in the listing process. The government has put the process on fast track mode and we should expect to hear the launch dates soon.
The LIC IPO application can be made either online through ASBA (using net-banking) or UPI (through your broker).
To apply online through ASBA, you need to have a bank account with net banking facilities. You need to fill and submit the online IPO application forms with the bank.
To apply online through UPI, you need to submit the IPO application through your broker.
LIC IPO is likely to be expected by March 2021.
An IPO process normally ranges between four to six months. The government needs to complete a long list of activities in the pre-IPO phase with the help of advisors including deciding the timing for IPO, company valuation, preparation of restated financial statements, DRHP, filing of IPO, finalizing IPO details etc. Considering the huge size of LIC, arriving at company valuation is going to be a challenging and time-consuming task.
In addition to these normal pre IPO processes, the government will also need to amend the LIC Act 1956 before the launch of IPO which is going to add to the timeline.
Considering all these factors, we need to see if the targeted IPO timelines are adhered to.
The LIC IPO should not change anything for its employees. Moreover, it is speculated that employees may get special quota at a discount to participate in LIC's equity.
With the announcement of government selling a partial stake in 100% owned LIC, it created panic amongst employees with fear of privatization. However, as per the company management, this stake sale will not change the ownership of LIC as the government will sell not more than 10% of its stake. Thus, LIC will still qualify as government-owned and should not be viewed as the privatization of LIC with no impact on its employees.
The LIC IPO is not expected to have any impact on the existing policyholders.
On the other hand, it is expected by the experts that the listing of LIC will indirectly benefit the policyholders. The listing of LIC will enhance transparency and governance in its operation as LIC will have to adhere to all listing requirements as per SEBI rules thereby boosting its efficiency.
Moreover, it is speculated that LIC policyholders may get a reserved quota in this IPO.
LIC IPO is expected to indirectly benefit the policyholders by boosting LIC's operational efficiency with its listing. It is also speculated that the IPO may be launched with a reserved quota for policyholders.
With the listing of LIC, LIC would come under direct SEBI scanner and would be required to adhere to the listing requirements. This would enhance transparency in its operation and strengthen overall corporate governance within LIC.
Since the announcement of LIC IPO, it has created fear in the minds of policyholders to lose the sovereign guarantee offered by LIC. However, the Finance Minister has assured that the interest of policyholders will be protected as LIC will retain its sovereign guarantee.
Having said so, it is also expected that the LIC Act 1956 will require amendments before the launch of IPO in terms of dividend distribution amongst other things. Thus, we need to wait for the outcome to see if the change in Act would have any impact on the policyholders.
|
| Link|May 1, 2022 11:42:35 PMReply
|| Link|December 7, 2021 10:33:07 AM
|| Link|January 10, 2022 8:17:24 PM
|| Link|September 1, 2020 11:23:20 AM
FREE Intraday Trading (Eq, F&O)
Flat ₹20 Per Trade in F&O
|
|
