More than three crore shares will be reserved for the policyholders of LIC (Life Insurance Corporation), the country’s largest life insurance company. Not only this, more than 1.5 crore shares will be reserved for LIC employees as well. This has been disclosed from LIC’s DRHP. It is expected that its IPO will hit the market by next month.

DRHP filed by Finance Ministry
Yesterday, on behalf of the Union Finance Ministry, the draft document was filed with the stock market regulator SEBI for LIC IPO. According to the draft red herring prospectus (DRHP) filed with SEBI, the government will sell 316,249,885 equity shares of LIC. Tuhin Kanta Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM) tweeted, “DRHP for LIC’s IPO has been filed with SEBI today.” The government aims to list Life Insurance Corporation (LIC) on the stock exchanges by March.

How much share reserve for policyholders
A portion of the IPO will be reserved for anchor investors. Also, up to 10 percent of LIC’s IPO issue will be reserved for policyholders. This means that there will be 3.16 crore shares reserve for the policyholders. Along with this, up to five percent shares will be reserved for the employees of LIC.

LIC’s disinvestment is important for the government
For the current financial year, the government has revised its disinvestment target and reduced it to Rs 78,000 crore.  But even this is not expected to be fulfilled.  Hence, LIC’s IPO is important for the government.  The government has so far raised around Rs 12,000 crore through the privatization of Air India and stake sale in other PSUs.

LIC’s share in the domestic market is 64 percent
LIC had a domestic market share of over 64.1 per cent in 2020. According to Crisil’s report, LIC is the third largest company in the world in terms of life insurance premiums. According to the report, LIC’s market share was 100 percent in the pre-2000 era, which gradually came down to 71.8 percent in 2016. In 2020, the market share of LIC has further reduced to 64.1%.