LIC IPO is one of the major talks of the town. The government-owned insurance company LIC was in monopoly till the 1990s, after which the government decided to introduce the private firm in the field of insurance. As the firm finally decided to launch its IPO this year, here are some key takeaways you need to know before investing in the LIC IPO. This article covers everything you need to know for the upcoming Lic IPO, from DRHP to the expected valuation and the IPO size.
Insight of LIC
LIC (Life Insurance Corporation) is a government-owned life insurance firm established in the year 1956. LIC is a government-owned insurance company based in 1956. LIC was in monopoly till 1990, after which the government opened up the segment for the private competitors. The company is the merger of the 245 insurance companies in India. Moreover, the company currently has 2,048 branches all over India. The zonal offices of the company are in major cities like Delhi, Chennai, Mumbai, Kolkata, Kanpur, Patna, Bhopal and Hyderabad. Also, there are 113 Divisional Offices, 1,178 Mini Offices and 1,526 Satellite Offices.
An overview of LIC IPO
LIC is expected to come up with their IPO this year 2022 and most probably in March. The company has filed its DRHP. The government is selling its 10% stakes and is a part of the government’s disinvestment in LIC. The government plans to raise funds of 80,000 to 1 lakh crore, to which LIC IPO will contribute. Moreover, the company has reserved a quota for the policyholder that will give the policyholder a chance in the IPO listing.
Key pointers of the LIC IPO Strength
- The annual report data states that the market share of the LIC is around 69% in the life insurance segment
- Apart from the life insurance company deals in other insurance segments like LIC Housing Finance, LIC Mutual Fund, LIC Pension Fund, LIC Cards Services. Moreover, they have acquired the IDBI bank in 2019.
- The asset volume of the company was around Rs 31.11 lakh crore in the fiscal year 2018-19.
- Premium received in 2018-19 was around 2 lakh crore.
- The investment volume in 2019 was Rs 29.84 lakh crore, which includes investments in debt and equity.
- LIC is also the largest insurer with a total of 68.9 per cent shares in the new business premium collection and 60.9 per cent in an annual premium collection
- LIC has one of the largest networks of agents from all around the country. Till the year 2021, it has 13.53 lakh agents in comparison to the stats of the other 20 private life insurers, which have a total of around 11.01 lakh agents.
- The company offers various plans, such as life insurance plans, endowment plans, whole life plans, money back plans, term insurance plans, and insurance riders.
- LIC caters for a large employee base that is around 1.14 lakh.
Risks involved in the LIC IPO
Multiple private players are being a competition by offering better service to policyholders. LIC is a Public sector Undertaking that has certain restrictions. The company needs to change some of its internal policies based on the country’s fiscal/monetary policy changes.
How to apply for LIC IPO
Here are the simple steps you need to follow if you want to apply for the upcoming LIC IPO.
- Login to your Demat account using the credentials provided.
- Once you get a login, go to the IPO section; you can apply for the LIC IPO. Once you log in, Go to the IPO Section and Apply for IPO.
- You can set the details accordingly, set the details for the bidding, and confirm the order for the same. You can modify your bid and then confirm the final bid.
- Confirm the bidding details and then the order after this confirm the order by clicking the ok option and you have applied for the IPO.
You need a Demat account to apply for any upcoming LIC IPO. For that, you can contact a broker or a sub-broker who can help you with the process of opening a Demat account. Read Our Latest Article to know how to apply LIC IPO, if you are a registered user in listed companies – How to apply for LIC IPO in Zerodha How to apply for LIC IPO in 5Paisa
LIC IPO: Issue size
In this LIC IPO, the government is planning to offload 5 percent of the shares owned in the company. The company’s embedded value is, and the IPO valuation is estimated around Rs 5 times. The expected valuation of the company is around 15 trillion, and the cost of the government selling shares is approximately 316 million shares. Reserve portion for policyholders LIC has more than 29 million policyholders and more than 1.3 million agents. A portion of the IPO will be reserved for the policyholders, and it is expected that 10 percent of the portion will be kept aside for the LIC policyholder.
LIC business growth
The business has seen quite a growth, with a 64.1 per cent or with a gross written premium (GWP) of $56.4 billion, the market shares are unparalleled globally. Moreover, the new business premium stands at 66.2 per cent, and the number of individual policies stands at 74.6 per cent. Also, the company has 2,048 Branch offices, eight zonal offices, 113 divisional offices. The standalone asset management AUM of LIC in the fiscal year 2021 stood at Rs. 36.7 trillion vs Rs 16.8 trillion in FY20. They also offer various other services, such as LIC Pension Fund, LIC Cards Services, IDBI Bank, LIC Housing Finance, LIC Mutual Fund Trustee Company, and LIC Mutual Fund AMC. LIC is the sixth largest, with $522 billion in terms of assets.
In conclusion, this article covers everything you need to know about the upcoming LIC IPO. The company is well known for its life insurance policy business and has been the oldest in the market. It has already filled its DRHP and is set to hit the primary market soon.