Did you know that LIC’s assets worth $463 billion exceeds the GDP of several economies? Yes, the company is that huge and now imagine it going through an IPO. LIC is the largest asset manager in India and will also be the biggest IPO with plans to raise about Rs 50,000 crore. It is bigger than the IPOs of Paytm (Rs 16,000 crore), Coal India (Rs 15,000 crore) and Reliance Power (Rs 11,700 crore) combined. According to the media reports, the draft prospectus of LIC IPO will be filed by this month and the issue will hit the market in the fourth quarter of the current fiscal year.
The question now is – Is this the right time to bring out the LIC IPO? Experts believe that the IPO is much delayed because it missed the golden opportunity in 2021. Most of the recently listed companies mopped a substantial amount of liquidity from the market. Now fluctuating crude oil price, inflation and Omicron wave poses uncertainty on the successful listing of LIC. The poor performance by much-hyped Paytm reflects the lacklustre sentiments of the retail investors.
Should This Concern You?
Very much. India’s insurance sector is vast, and there are about 24 life insurance companies. Other than LIC, there is HDFC Standard Life, one of the biggest private players in the market. The company is already listed in the market and has been delivering a rather tepid performance. In the last year, HDFC Standard Life is down 10%.
Other listed companies like SBI Life, ICICI Prudential and ICICI Lombard have also not delivered an encouraging performance. There’s a peg, here again, we can’t directly compare LIC with other listed insurance players because LIC has a large number of products and subsidiaries that will make the valuation a hard guess.
What Lies Ahead?
Considering LIC’s size and its offerings, the company will lead the life insurance space for another three-four decades. This makes it relatively more attractive than the others. Therefore, there could be a possibility where LIC could deliver good returns in the future. Also, the government is directly involved in the business. Post-pandemic, LIC is upgrading its technology infrastructure. All these positive indicators paint a rosy picture for the IPO.