In the Budget 2021-22, the Finance Minister reaffirmed the report about the finalization of the LIC IPO in 2021-22.
The government of India is hoping to list the impending LIC IPO on country grown bourses in the January-March quarter of the current fiscal year. The LIC IPO will contribute a critical lump to the government’s planned disinvestment focus of Rs. 2.10 lakh crore this fiscal year.
The forthcoming LIC IPO comes when the government’s arrangements to strip its stake in Air India, BPCL and Concor have been set aside for later because of the COVID-19 pandemic. Truth be told, the bid greeting cutoff times for Air India and BPCL have been pushed back more than twice this fiscal year.
What is LIC Industries IPO ?
The Life Insurance Corporation of India (LIC) was established on September 01, 1956, after the Parliament of India passed the Life Insurance Corporation Act, 1956. It was made with the sole motivation behind spreading life insurance for the nation over and giving insurance cover to each citizen at a reasonable expense.
In India, there are 24 life insurers presently in activity, with LIC commanding the best and top position with a piece of the pie of 69% in FY20. During this fiscal year alone, LIC had gathered first-year charges of Rs. 1.78 trillion – 25.17% higher than that of the earlier year’s Rs. 1.42 trillion, as per the Insurance Regulatory and Development Authority of India. It is additionally significant that LIC, where the government of India holds a 95% stake, has assets worth Rs. 34 trillion.
With the banking sector in India going through a troublesome stage because of the continuous COVID-19 pandemic and issues identified with asset quality, the circumstance of an IPO as extensive as LIC could not be more seriously fascinating. The posting of a particularly conspicuous firm as the LIC can help the BFSI sector recapture its weight in the lists and pull in an enormous number of retail and institutional investors.
- LIC is one of the biggest state-possessed life insurance companies in India and the biggest financial investor as well.
- Being a PSU, there are sure limitations on LIC.
- While the details are yet to be finished, existing policyholders may get a 10 per cent allocation in the IPO.
The Government of India has chosen to reduce its holding in LIC by dispatching a public issue in 2021. This is required to make the working of LIC more transparent and efficient. More pieces of information will be refreshed once the organization documents the Red Herring Prospectus with SEBI.
Why apply for the LIC IPO?
- The Life Insurance Corporation of India has a pan-India presence with 8 Zonal Offices, 113 Divisional Offices, 2048 completely modernized Branch Offices, and 1381 Satellite Offices the nation over. Further, it offers ECS and ATM-payment options at offices, online stands, IVRs, and data centres in select urban areas to help clients.
- LIC India is an old household name in India. It consistently includes in the rundown of the best 20 most trustworthy brands in the country.
- It is the biggest financial investor in India with assets under administration management worth around Rs.15 lakh crore.
- LIC has more than 1,14,000 permanent employees and in excess of 11 lakh agents. The organization has likewise tied up with different banks and specialist co-ops to offer an online premium payment facilities to policyholders
- The LIC IPO will offer retail investors a chance to be a piece of the biggest public sector insurance organization in India. When the exact price per share will be delivered, the valuation of the IPO can measure up to the business benchmark and natural worth of the organization.
- LIC faces rivalry from numerous private players offering better services and facilities to their policyholders.
- Since it is a public sector undertaking, any changes made by the government can impact its policies. LIC additionally needs to change its inward policies dependent on any fiscal/money related policy changes in the country.
What is the value of LIC IPO?
The public offer (IPO) of the goliath Life Insurance Corporation (LIC) is probably going to be at Rs 400-600 for each offer expecting Rs 25,000 crore as settled up capital and a general valuation between Rs 10-15 lakh crore.
The new approved offer capital is arranged as Rs 25,000 crore which would be partitioned into 2,500 crore portions of Rs 10 each according to the corrections proposed in the LIC Act, 1956. Expecting the approved capital as the settled up capital, the LIC would have an all out share capital of 2,500 crore portions of a presumptive worth of Rs 10 each.
As per proposed changes, the government intends to hold in any event 75% in LIC’s value for the first five years post the IPO, and later reduce its holding to at least 51%. It additionally plans to hold up to 10 percent of the LIC IPO issue size for policyholders.
However, the IPO cost may change if the government chooses to issue a lesser settled up capital from the approved 2,500 crore offers to say 1,500 crore shares or lesser 1,000 crore shares. Essentially, the actual valuation figures will likewise change the evaluating. The valuation of 64-year-old LIC is an extremely perplexing activity. LIC is administered by an uncommon LIC Act with the insurance controller, Insurance Regulatory and Development Authority of India (IRDAI) having next to no say in directing its activities.
How to apply for the LIC IPO?
Now, you can apply for the IPO through the normal IPO application process using Zerodha, Upstox or any other broker and if you don’t know how to apply for IPO read our blog on ‘Easy Step by step guide to apply for IPO in India’.
But, honestly speaking getting allotted for an IPO is like winning a lottery and it depends on your luck. If you do get allotted then read our blog on ‘How to make money using IPO in India’.
Application of IPO is subject to block of funds with the bank account so during UPI ID application enable the Auto Pay option.
When will the LIC IPO open?
On February 02, 2021, DIPAM Secretary Tuhin Kanta Pandey affirmed that investors can anticipate that the LIC IPO should open post-October 2021. Further, DIPAM has enlisted the administration’s services of the actuarial firm Milliman Advisors to decide the worth of LIC prior to listing the IPO.
LIC is a trusted old company with an established name. But if you are applying for the IPO you should always check in details about the Investment and analyse all the risk and reward.
You can invest for long term growth or can apply for the listing gains if the IPO covers all the parameters.