The Life Insurance Corporation of India has launched its initial public offering (IPO) at 10am today, aiming to raise just more than ₹21,000 crores, which is the country's largest till date. The offer will run from May 4-9, and will see the government offering to offload 3.5% of the company.
"The time has come for LIC to be listed; I believe all LICians will work together to make it a huge success, and from now on we will call it LIC 3.0", said MR Kumar, who described LIC 1.0 as the first two decades where it struggled to sell insurance and gathered momentum in the 70s and 80s, and LIC 2.0 where it adapted to the competition.
LIC's IPO was announced in the Union Budget presented in 2021. This year, in the Union Budget presented on February 1, Finance Minister Nirmala Sitharaman said that the IPO was expected "shortly". This was a reference to the first planned launch of the IPO, which was scheduled to take place towards the end of the previous financial year, but got delayed after the Russian military action in Ukraine starting February 24 sent financial markets downhill globally.
Here's all you need to know about the IPO.
1. The size
The IPO is valued at nearly ₹21,000 crores, in what is slated to be India's largest IPO yet. Fintech company PayTM launched its IPO worth ₹18,300 crores in November 2021, which currently stands as the largest in terms of value.
The government will look to offload 3.5% of its stake in LIC through an offer for sale of around 22 crore shares. This is actually a step down from when it filed its Draft Red Herring Prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) in February, when it looked to offload a 5% stake.
2. Reservations for policyholders and employees
LIC has reserved 5% of the issue for its employees, and 10% of the issue for policyholders.
Further, 35% of the issue will be reserved for retail investors
Also Read: Good News For LIC Policy Holders, Up To 10% Quota Reserved In IPO
3. The price band
The price will be from ₹902 - ₹949 per share.
Policyholders will get a ₹60 discount per share, while for employees and retail investors, the discount will be ₹45 per share.
Any investor wishing to subscribe can do so in lots of 15 shares and multiples of them thereafter.
4. Important dates
The IPO will run from May 4 to May 9. Investors can invest in the IPO through their brokers online, or through the ASBA facility offered through their bank accounts.
The expected dates of LIC's IPO listing is May 17.
5. LIC's financials
LIC reported a net profit of ₹1671.91 crores in the nine-months ending December 2021. For all of financial year 2021 (which ran from April 2020 to March 2021), it was ₹2,734.34 crores, an increase of 17% over the previous year.
First year premiums grew 9.94% year on year to ₹8,748 crores, though LIC saw a fall in single premiums; witnessing a deceleration of 5.5% year-on-year.
Private sector players commanded a nearly 64% share in annualised individual premiums, and LIC the remaining 36%. However, LIC commands a 60% share in the overall life insurance business.
Despite this, a note from Macquarie in March says that its market share is falling.
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