LIC IPO: Things to Know ahead of India’s Biggest Public Issue Launch

According to the capital market regulator, the government has filed a draught Red Herring Prospectus (DRHP) for the sale of a five percent stake in Life Insurance Corporation of India (LIC). This will be India’s largest ever public offering. People who work for the country’s biggest insurance company would receive a reduction on the base rate.

LIC IPO Price

The LIC IPO is a government-sponsored sale, and no new shares will be issued by the Life Insurance Corporation of India (LIC). Over 632.49 million shares of LIC are owned by the government. Each share has a face value of Rs. 10 on it.

The largest IPO in the history of the stock market.

LIC’s initial public offering (IPO) is expected to be the largest in Indian stock market history, and the company’s market value will be similar to top corporations like RIL and TCS.

At Rs 18,300 crore, Paytm’s initial public offering in 2021 was indeed the largest in history, followed by Coal India’s IPO in 2010 at about Rs 15,500 crore, and Reliance Power’s initial public offering in 2008.

Know More About Them 

With a market share of more than 64.1 percent, LIC is the world’s largest insurance company in terms of home-market share. According to a Crisil analysis, it is also the only insurance company in the world that delivers the best return on equity at 82%, making it the third-largest life insurer in the world.

LIC’s initial public offering (IPO) garnered Rs 65,000 crore, according to data analysed by PrimeDatabase, surpassing the total amount raised in any calendar year except 2017 and 2021. 63 issues raised Rs 1.19 lakh crore in 2017 while 36 IPOs raised Rs 67,147 crore last year.

In addition, after its IPO, the insurer would be one of India’s top three most valuable equities, alongside Reliance Industries & Tata Consultancy Services (TCS).

In the ultimate week of January, LIC is expected to file its draught prospectus (DRHP) with the Securities and Exchange Commission (SEC).

A preliminary prospectus for foreign investors to buy shares in LIC must include quarterly earnings for such December quarter and a breakdown of the company’s assets under management. Before the end of current fiscal year, the administration intends to conclude the public issue.

Technicalities Involved

Noteworthy is that the Department of Investment & Public Asset Management is a novel government institution tasked with overseeing the insurer’s listing, as well as finalising the embedded value — a procedure critical for assigning the value of LIC shares — and other aspects of the insurer’s business.

The embedded value of a life insurance company can be computed as the total of the net asset value as well as the present value of future profits earned by the company. firms such Milliman Advisors, Ernst & Young, and others have been hired to examine the embedded value of LIC, which also covers the assessment of all of the insurance policies issued by LIC, among other things.

Significance Of LIC IPO

As reported by Bloomberg news, LIC might raise quite so much as $10 billion from its first public offering (IPO), with a minimal dilution of 5 percent. In this case, this would be the 3rd biggest initial public offering (IPO) ever to involve an insurer in the world, according to the Financial Times.

Success in the listing process will also help to improve India’s global image, while also assisting the government in significantly reducing the disinvestment objective deficit for the current fiscal year.

The LIC IPO is a “great step” not only for India’s capital markets, as well as for the country’s economic growth, according to Mark Mobius, an experienced developing markets investor as well as founder of Mobius Capital Partners LLC.

A large-scale listing might result in an increased market capitalisation and improved liquidity for the Indian market, making it more appealing to institutional investors such as pension funds and endowments, not only in India but also internationally, according to Mobius Capital.

Will It Be A Success?

While some experts are sceptical that LIC’s huge public offering would garner the same level of interest as some other companies’ IPOs in 2021, others are optimistic, pinning their hopes on India’s IPO frenzy, which has been particularly popular among retail investors in recent months. Aiming to attract even more small retail traders, the government is considering offering policyholders across the country up to 10 percent of the LIC’s first public offering (IPO) shares. For more updates, keep checking share market news.

FAQs

  • If the LIC goes public, when can I expect it to do so?

LIC’s initial public offering (IPO) is scheduled to go public in 2019. Because the Hon’ble Finance Minister Nirmala Sitharaman stated in her budget speech that the LIC IPO would be completed before the end of the fiscal year 2021-22, it is projected to open for subscription around the second week of March 2022 and to be listed before the 31st March 2022.

  • Are you aware of the launch of LIC’s initial public offering (IPO)?

Initial public offering (IPO) of the LIC is expected to take place on March 11, 2022, with the general public being able to participate. This will be the largest involvement in Indian markets in the country’s history. Demat accounts are held by 73.8 million individuals in India, according to the research. Immediately following the Covid-19 pandemic, the number of investors in India soared.

Conclusion

The operation of the firm over the long term must be evaluated before to making an IPO investment. It is especially important to be cautious if the company’s revenues have risen dramatically in the months before to its first public offering (IPO). If a company’s revenue has increased steadily over time, it is almost always a successful enterprise.