The LIC IPO – Everything You Must Know

The LIC IPO – Everything You Must Know

The LIC IPO – Everything You Must Know- The biggest and the most awaited IPO of the year is the Life Insurance Company of India (LIC) IPO. LIC is a market leader in its industry that offers fixed return plans along with life insurance. The company enjoys a massive customer trust in the country, built over 65 years. It will be, by far, the biggest IPO in the history of Indian stock markets. Given the buzz, it is expected that an unprecedented number of investors will apply for the IPO. This issue will likely have reserved portions in the listing for employees and LIC policyholders (customers). Today, online investing has made it easy to apply for an IPO.

A few simple steps and your IPO application will be completed. If you do not have an account, you can open Demat account online  to apply for the LIC IPO.

Key facts:

1. LIC is the market leader in the insurance industry with a whopping market share of more than 66% in terms of new business premium (NBP), a 64% market share in terms of premium.
2. This corresponds to an asset under management (AUM) of INR 39 lakh crore serviced via 2048 branches, 113 divisional offices, and 1554 satellite offices. This means, across the length and breadth of India, you will find a LIC service center and agent.
3. To give a perspective, the AUM of INR 39 lakh crore is more than the entire mutual fund industry put together.
4. LIC has 13.5 lakh registered agents who bring in most of the business.
5. The DRHP discloses the embedded value (EV) of LIC as INR 5,39,686 crore. EV is one of the most effective ways to come at a valuation for an insurer’s IPO. The EV can be calculated as a net worth (including capital) added to the total of the present value of all future profits from ongoing business.
6. The president of India is the promoter of the company, acting through the ministry of finance.

Something to note:

1. Insurance products are usually low-margin products.
2. LIC is a unique business model. The premiums cannot be recognized as revenues and while the payment is collected upfront, there is a promise to pay a fixed amount at a later date. This makes it very difficult to value the company.
3. Competition is intensifying in the market, which reflects in the urban areas where LIC has been losing its market share.
4. The Covid-19 pandemic remains a consistent risk for insurance companies that could adversely affect the business.

What products does LIC sell?

LIC sells various financial products tuned to the market needs. Some products are:

• Participating insurance products
• Non-participating products like
  • Unit-linked insurance products
  • Term insurance
  • Savings insurance
  • Health insurance
  • Annuity and Pension plans

IPO Details

While SEBI has given the go-ahead to the draft red herring prospectus (DRHP) filed with SEBI on 13th Feb, LIC has not officially declared the dates, price bands, reserved categories yet. The next step is to file an RHP document which will have all the details about reserved portions, dates, price band, lot size, etc. LIC and the government are likely waiting for the Russia-Ukraine war-induced volatility to calm down and then go ahead with the listing.

The LIC IPO, which stands for Life Insurance Corporation of India Initial Public Offering, was a major event in the Indian stock market history. It took place in May 2022 and became the largest IPO ever in India, raising a staggering ₹20,550 crore (approximately USD 27 billion).

What was the LIC IPO?

1. The government of India partially offloaded its stake in LIC, the largest life insurance company in India, by selling shares to the public through an IPO.
2. It meant that a portion of LIC’s ownership became available for investment by individual and institutional investors.

Why Was It Significant?

1. The IPO size was unprecedented in the Indian market, attracting significant attention and investment.
2. It was seen as a significant step towards privatization and disinvestment of government-owned companies.
3. It allowed retail investors to participate in owning a well-established and financially strong company like LIC.

Key details of the IPO:

1. Issue size: ₹20,550 crore (approx. USD 27 billion)
2. Offer price range: ₹450-490 per share
3. Reservation for policyholders: 10% of the issue size
4. Listing date: May 18, 2022
5. Market capitalization at listing: ₹6.1 lakh crore (approx. USD 80 billion)

Current Status (As Of December 16, 2023):

1. LIC’s share price has fluctuated since the listing date, trading around ₹620 per share.
2. The company remains the most valuable listed company in India by market capitalization.
3. It continues to be a popular choice among long-term investors due to its solid financial spot and dividend payout potential.

Resources Of LIC IPO:

1. You can find more detailed information about the LIC IPO on the websites of the Indian government and regulatory bodies like SEBI.
2. Financial news websites and publications also provide extensive coverage and analysis of the IPO and its impact.

Conclusion

The LIC IPO – Everything You Must Know- The biggest and the most awaited IPO of the year is the Life Insurance of India (LIC) IPO. LIC is a market leader in its company that offers fixed return plans and life insurance. This issue will likely have reserved portions for employees and LIC policyholders (customers) in the listing. The next trend is to file an RHP document with all the information about reserved portions, dates, price band, lot size, etc.

The LIC IPO, which stands for Life Insurance Corporation of India Initial Public Offering, was a significant event in the Indian stock market history. The government of India partially offloaded its stake in LIC, the largest life insurance company in India, by selling shares to the public through an IPO. The IPO size was unprecedented in the Indian market, attracting significant attention and investment.

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