The country’s largest life insurer, Life Insurance Corporation of India (LIC) will launch its initial public offer (IPO), the biggest in the history of the Indian capital market, today. With LIC IPO, which is through an offer-for-sale, the government is aiming to divest its 3.5 per cent stake in the insurer by selling 22,13,74,920 shares. The offer will open for subscription on May 4 (Wednesday) and the last day to subscribe to the LIC IPO is May 9 (Monday). Shares will be allotted to successful bidders on May 12, and the refund to unsuccessful bidders will be credited their accounts on May 13. Shares will be credited to the demat account of the successful bidders by May 16 and the stock will debut on the bourses on May 17.
LIC IPO Reserved Portions
The IPO is entirely an offer-for-sale of 221,374,920 equity shares by the government, which will receive the entire proceeds from the IPO. Out of the shares on the block, up to 1,581,249 units are reserved for employees and up to 22,137,492 are reserved for the policyholders.
Of the total offer size, 50 percent of the net offer will be reserved for qualified institutional buyers, 35 percent for retail investors, and the remaining 15 percent for non-institutional investors.
Also Read: LIC IPO Opens Today: Should Policyholders Subscribe? All you Need to Know
LIC IPO: Price Band
The company has fixed a price band of Rs 902-949 for the public issue, which will close on May 9. At the upper price band, the insurer will have an estimated market capitalisation of Rs 6 lakh crore.
LIC IPO: Lot size
Investors can bid for a minimum of 15 equity shares (1 lot) and in multiples thereafter.
LIC IPO: Financials
LIC’s total asset has grown at a CAGR of 8 per cent from FY17 to FY21 to reach Rs 36.8 lakh crore while its net premium earned grew at a CAGR of 6 per cent from FY17 to FY21 to reach Rs 4 trillion.
LIC’s profit after tax has grown at a CAGR of 5.1 per cent to reach Rs 2970 crore during the same period. The company reported a GWP (gross written premium) growth of 7.4 per cent CAGR over FY17-21. LIC saw a profit after tax of Rs 1670 crore for 9MFY22. For the 9MFY22, NBP stood at Rs 1,58,040 crore.
“We expect the GWP for LIC to grow at 13 per cent CAGR over FY21-25, driven by 17 per cent CAGR growth in NBP,” KRChoksey Shares and Securities said in a report.
LIC IPO Objective
The objectives of the issue are to achieve the benefits of listing the equity shares on the stock exchange and to carry out an offer-for-sale of 221,374,920 shares by selling shareholders.
LIC IPO: Key Strengths
LIC’s key strengths lie in the fact that it is the fifth largest life insurer globally by GWP and the largest player in the fast-growing and underpenetrated Indian life insurance sector. It is a trusted brand and has a customer-centric business model; it has strong presence across India through an omni-channel distribution network with an unparalleled agency force; it is the largest asset manager in India with an established track record of financial performance, profitable growth and has a robust risk management framework.
Its key business strategy is to capitalise on the growth opportunities in the Indian life insurance sector and further diversify the product mix by increasing the contribution of the non-participating portfolio. It aims to further reinforce its omni-channel distribution network and increase its productivity while continuing to leverage technology to aid growth, drive operating efficiencies and provide digital support.
LIC IPO Anchor Investments
Ahead of the launch of the LIC IPO, the insurer raised Rs 5,627 crore from anchor investors on Monday. Society Generale, Government Pension Fund of Norway, Government of Singapore, Monetary Authority of Singapore, and BNP Investments, are among the foreign funds that are invested. Meanwhile, 71 per cent of the total allotment was made to domestic mutual funds (MFs), which shows a disclosure by the company.
LIC IPO: GMP Today
LIC IPO has commanded a 9 per cent premium over its upper price band in the grey market as the Rs 21,000-crore issue opens for subscription today. In fact, the traded grey market premium has increased from 5 percent, quoted last week. As per the data by IPO Watch and IPO Wala, LIC traded at a premium of Rs 85 per share in the grey market on Wednesday, against Rs 45 premium last Thursday. This means, at the upper end of the price band, LIC shares are trading at Rs 1,034 (Rs 949 + Rs 85), as LIC IPO GMP today is Rs 85, which is around 9 per cent over the issue price.
Also Read: LIC IPO Subscription Opens Today: GMP, Financials, Review; Should You Apply?
LIC IPO: About the Company
The company offers participating insurance products and non-participating products like unit-linked insurance products, saving insurance products, term insurance products, health insurance, and annuity and pension products. As of December 31, 2021, LIC had a total asset under management of Rs 40.1 lakh crore on a standalone basis. The company has 8 zonal offices in Delhi, Mumbai, Kolkata, Chennai, Kanpur, Patna, Bhopal, and Hyderabad. It also operates globally in Fiji, Mauritius, Bangladesh, Nepal, Singapore, Sri Lanka, UAE, Bahrain, Qatar, Kuwait, and the United Kingdom.
LIC IPO: Should you subscribe?
On whether the LIC IPO should be subscribed, Hem Securities, said: “Company is bringing the issue at a price band of Rs 902-949 per share at p/ev multiple of 1.1x. LIC being the Fifth largest life insurer globally by GWP and the largest player in the fast-growing and underpenetrated Indian life insurance sector is a trusted brand and a customer-centric business model. has a presence across India through an omni-channel distribution network with an unparalleled agency force. The company is the largest asset manager in India with an established track record of financial performance and profitable growth looks decent investment avenue. Hence we recommend “Subscribe” on the issue.”
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