If you are a policyholder, an employee and a retail investor then you can bid for Life Insurance Corporation's (LIC) initial public offering (IPO) under all three categories separately to avail discounts under each head.
Though the price band for the IPO has been fixed in the range of Rs 902-949, the insurer offers special discount of Rs 45 per share discount on the cut-off price for retail investors and employees of LIC. Moreover, there is a discount of Rs 60 for policyholders. The discount is available for policyholders who bought their policy on or before April 13, 2022, the day LIC had filed its draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI). Moreover, the discount will be offered to all policies that have not exited LIC records due to maturity, surrender or the policyholder's death.
"One can apply under three different categories to avail the discounts offered, confirmed M . R. Kumar, LIC Chairman, on the sidelines of a press conference held on Friday in New Delhi. Kumar adds, "We will also ask our agents to assist our policyholders in opening demat accounts."
As per the revised plan now the government will now disinvest a 3.5 per cent stake in LIC to collect approximately Rs 21,000 crore from the markets. It will be the largest-ever IPO of the country, which is set to open from 4th May and close on 9th May. The IPO will get listed on May 17.
At the cut off price of Rs 949 the insurer will have an estimated market cap of Rs 6 lakh crore, which is 1.1 times of its market cap. It is considered to be fairly priced and available at a discount compared to its listed India well as global peers which many experts believe has given global and domestic investors a fair chance to grab a bite compared to earlier pricing and valuation. LIC's embedded value is Rs 5.4 lakh crores as of September 30, 2021, according to actuarial firm Milliman Advisors.
"LIC is synonymous with insurance in India and enjoys a huge competitive advantage in terms of brand value. However, there are concerns with the company like losing market share to private players, lower profitability and revenue growth compared to private players. But the valuation of 1.1 times Price to Embedded Value discounts the above concerns and policyholders getting a discount of Rs 60 makes this a bumper offer," says Santosh Meena, Head of Research, Swastika IInvestmart Ltd.
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