LIC IPO – What you must know about the largest IPO in Indian history?

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LIC IPO – What you must know about the largest IPO in Indian history?: LIC established five zonal offices with 33 divisional offices and 212 Branch offices in 1956. Currently, LIC tends to operate with eight zonal offices, 113 divisional offices, and 2048 digitally well-equipped branch offices, and 1381 satellite offices across the nation. 

LIC IPO - What you must know about the largest IPO in Indian history

Besides that, LIC tends to hold a partnership with a plethora of different banks and financial institutions. The company also tends to offer an online premium collection facility to its policyholders.

LIC grew from Rs 200 crore of business in 1956 to Rs 1000 crore in 1968-70 on the business front.  The company had collected at least 2.19 lakh new individual policies with a first-year premium income of Rs 51227.83 crore as recent in 2019-20.

Some facts to know about LIC IPO:

  • LIC settled 26 million claims in 2019.
  • LIC had a market share of 70.9%, whereas the private insurer held 29.1% in October 2019.
  • LIC will become India’s most valued company if it launches LIC IPO.
  • The number of LIC agents in 2019 was 11,79,229
  • The GDP contribution of LIC is at least 7%.

It was announced that LIC would launch an IPO in 2021 during the Financial Budget 2021. Deloitte has been appointed by the government as the pre-initial public offer (IPO) transaction advisors. Post -COVID government will kick start the process entirely even though the IPO launch was slowed down due to the pandemic. Above all, there is no official date announced yet; hence once the pre-IPO phase is completed only then traders are likely to know about the IPO launch dates.

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Some details of the upcoming IPO:

LIC IPO size- Experts comment that the Indian government will not sell more than 10% of its stake in LIC even though it is estimated that the valuation will likely go up to Rs 8 lakh crores to Rs 11 lakh crores. Above all, traders need to wait for information from official sources as these are just the estimates from the experts.

LIC IPO Share Price- Ideally, there are no speculations of the price, mainly because the price will be based on the valuation and share price offered by the rivals in the insurance market. The issue price is likely to be announced one week before when the issue becomes available for public subscription.

LIC IPO Valuation – As per experts, the valuation of LIC can be between Rs. Eight lakhs to 11 lakhs crores but as of nothing is official, and determining the actual valuation of LIC is going to be quite challenging given the size of the company.

LIC IPO Allotment & Listing- The experts say that the government aims to give at least  10% of the shares to the policyholders. The DEMAT accounts will be open as the majority of the LIC policyholders don’t have a DEMAT account before the IPO launch around one crore; one is likely to get information related to sharing allocations in the LIC IPO allotment and listing documents. Ideally, the registrar of the IPO will publish the same, and one can also know about the demand for the IPO in the relevant form.

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LIC IPO news & latest Updates- The government announced the LIC IPO launch during the Union Budget on  1st Feb ’21 and appointed Deloitte as pre-IPO transaction advisors.

Tips for applying for LIC IPO– traders can apply for LIC IPO through any of their stockbroking firms or banks that tend to have ASBA service.

Business objectives of the upcoming IPO:

  • Make traders across the country aware of the life insurances, especially to the socially and economically backward people.
  • They will induce savings discipline in people and attract them with insurance-linked savings. Besides, the business will grow besides keeping in mind that the funds belong to the policyholders.

Things to know ahead:

  • The IPO of LIC would be scheduled in the second half of the fiscal year 2020-21, and it is undoubtedly going to be challenging to sell an IPO of this size unless there is a massive buy-in from long-only funds across the globe. Besides, the government is likely to look at getting the stock like the index right in the start so that passive funds and ETFs are likely to get interested in the store.
  • LIC was ideally run under the Statute of Parliament, and there is a separate LIC Act that mainly governs the constitution and functioning of LIC. LIC was explicitly conceived as a government-owned company with a challenging sovereign guarantee at the time of inception. The IPO would call for an amendment to the LIC Act to run the IPO, and this would have to be passed in almost both houses of Parliament.
  • LIC tends to continue to dominate India’s life insurance business despite the presence of private insurers for nearly 20 years. It has a market share of at least 76.28% in some policies and at least 71% market share premiums.
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Hence there has been a plethora of speculations regarding LIC IPO size, LIC IPO launch date, LIC IPO share price, etc. since the Finance Minister announced divestment plans for LIC in the budget of 2020. Being the largest state-owned insurance company in India, LIC tends to command at least 69 percent market share in total insurance premium collection. LIC collected Rs. 1.78 trillion in the first-year premium, 25.17 percent higher as compared to the previous year.

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