About LIC IPO
The LIC IPO is a complete offer-for-sale by the promoter. The President of India, acting through the Ministry of Finance, Government of India, is the company promoter. About 31.5 crore shares will be on offer, representing 5% equity. The proceeds from the IPO will help the government meet the divestment target of Rs 78,000 crore for fiscal 2022. The embedded value of the company is pegged at Rs 5 lakh crore. LIC will declare the details on the price band and IPO date later.
Financially, LIC’s half-yearly results showed its net profit zoomed to Rs 1,437 crore during April-September 2021 from Rs 6 crore a year earlier. During the same period, income from investments rose 12% YoY to Rs 1.49 lakh crore. This includes dividends, rent and interest. Net premiums rose to Rs 1.85 lakh crore from Rs 1.84 lakh crore.
What’s Unique About LIC?
Other than the insurance business, LIC has a massive investment pool. Its real estate assets include big offices at prime locations of major cities. LIC is also believed to own a large collection of rare artwork by legendary painters, including MF Hussain. Needless to say, it also has significant stock holdings.
The biggest strength of LIC is that it’s a household name. Indian salaried class have at least one LIC to their name, and that’s because it’s a government entity and the largest insurance provider of the country. It has a large range of insurance products to meet varied insurance needs. LIC has strong management with an established financial performance track record. Two decades after private insurers came into play, LIC continues to be the dominant force.
How Will Policyholders Benefit?
LIC plans to reserve one-tenth of the LIC issue size for policyholders. Employees of the LIC, as well as policyholders, will receive a discount on the issue price. The quantum of discount will be stated later, before the opening of the LIC IPO. Those who hold one or more life insurance policies with LIC will be able to apply under the reserved portion. All they need is PAN details linked with insurance policy and a Demat account.
What Lies Ahead?
LIC’s post-IPO market capitalisation may put it slightly ahead of billionaire Mukesh Ambani’s Reliance Industries. LIC IPO is an attractive opportunity for the government and the investors, but the 60-years trust of the Indian middle class could dry up.