LIC IPO: State-run insurer plans to keep the issue price low; expected share price around Rs 1700
A group of Ministers will be holding a discussion to decide the share price of the Life Insurance Corporation of India (LIC) public issue, which is set to hit the markets this month. The GoM will decide on the valuation of the share price and the estimated issue size. Zee Business's Anurag Shah reports.
A group of Ministers will be holding a discussion to decide the share price of the Life Insurance Corporation of India (LIC) public issue, which is set to hit the markets this month. The GoM will decide on the valuation of the share price and the estimated issue size. Zee Business's Anurag Shah reports.
The embedded value of the issue at Rs 539000 cr is already known and the wait is now for the declaration of the issue price, Shah says which will be determined on the basis of the PE multiple over the embedded value, he tells in his report. The public insurer wants to keep the price low for its policy holders, employees and retail investors with 50 per cent shares going to them.
LIC IPO will be country's largest Initial Public Offering (IPO) and the state-run insurer has already filed its Draft Red Herring Prospectus (DRHP)with Securities and Exchange Board of India (SEBI).
Citing his sources, Shah said that the PE multiple is expected to be around 2 and the expected price will between Rs 1600-Rs 1700. The decision is expected to be taken in a week's time.
Last week, the government took a major decision by allowing Foreign Direct Investment (FDI) in LIC, shah said.
The set limit for FDI investment is 20 per cent which is equivalent to 126 crore shares.
Zee Business, Managing Editor, Anil Singhvi, said that since FDI can only invest in the20 per cent of LIC IPO, the rest will be available for local investors. After FIIs, the remaining amount from issue size is expected to be Rs 40,000 crore, which will comprise policyholders, retail investors and others.
It is going to be a challenge for LIC to raise that amount of money but not impossible, said the Market Guru.
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