LIC IPO DRHP filed; all OFS, no fresh issue

Life Insurance Corporation of India (LIC) is looking to sell the government’s 5% equity stake in the company in the upcoming IPO, the Draft Red Herring Prospectus (DRHP) filed with capital markets regulator SEBI showed today. The government will offload a total of 316 million equity shares to investors through the IPO, out of the 6.32 billion equity shares outstanding, the DRHP showed. LIC’s DRHP has set the wheels in motion for the country’s largest public issue. LIC IPO will be entirely an offer for sale (OFS) by the promoter — The government of India.


The government is looking to sell 316,249,885 equity shares of face value Rs 10 each through the public issue, which is expected to hit the street before the end of the current financial year in March. The embedded value of LIC was finalized at more than Rs 5 lakh crore, a week ago. The proceeds of the LIC share sale will go to the Government of India, and the insurance company will not receive any funds from the all-OFS IPO, as there will be no fresh issue of equity shares.

The public issue may help the government reach its revised divestment target of Rs 78,000 crore, cut down from the initial target of Rs 1.75 lakh crore. So far this financial year the government has managed to raise Rs 12,000 crore from divestment receipts. The Government of India currently owns a 100% stake in LIC. LIC is a state-owned insurance behemoth, controlling a large portion of the market share.

LIC’s IPO will have a 50% reservation for Qualified Institutional Buyers (QIB), not less than 15% portion of the IPO will be reserved for Non-Institutional Investors (NII). This will leave 35% of the public issue reserved for retail investors. Policyholders of the state-run insurance company will also have a quota reserved in the LIC IPO along with employees of LIC. The public issue has been in the works for years now.