LIC IPO: All You Need To Know

7 min readMay 4, 2022

Life Insurance Corporation of India (LIC) India’s largest general insurance company which is in the news recently due to its upcoming IPO, which is going to open for retail investors and policyholders on 4th May 2022.
So let’s understand better today the business of Life Insurance Corporation of India and the complete math of its upcoming IPO.

क्या आप इसे हिंदी में पढ़ना चाहते हैं यहां क्लिक करें

LIC India’s largest insurer is going to go public.
LIC itself has the biggest reputation as compared to other insurance companies in India.
LIC is bringing its upcoming IPO in the market at a valuation of Rs 6 lakh crore.
As advised by Inside Press India, investors can consider parking the fund from a long-term perspective.

LIC IPO was first announced in the Financial Budget 2020. But due to financial instability and the huge upheaval in all the financial markets due to coronavirus, the government had to continue it for 2 consecutive years. The government was waiting for a bull run in the market for 2 years and now India’s largest insurance company has opened its doors to all its investors and co-financiers. LIC cannot be compared with any of its counterparts or other Indian insurance companies. But now the wait for LIC’s much awaited first float is over. As we know that LIC has filed DRHP and now it has become a big topic of discussion in India. We have read and seen many articles about LIC IPO issues, pricing, size and valuation across India.

Earlier LIC was planning to raise Rs 68000 crore from the market. After Russia Ukraine war liquid situation in global markets and slowdown of economy with rising inflation now LIC had to rethink its pricing and money to be taken from the market and now LIC IPO of Rs 21000 crore in Indian market Which is going to be the biggest ever IPO in history. (Note where we are not considering Mega Rights issue of Vodafone Idea, Reliance Industries who have already raised funds above Rs 24000 Crores, in fact Reliance has raised more than Rs 52000 crore Indian rupees.

About Company

Life Insurance Corporation of India is the only PSU life insurance company in India since 1956 and till then it was functioning under a special LIC Act. But with its upcoming IPO, now it will do its further business according to the rules of IRDA. LIC has a very good hold on the domestic market of India and is a trusted brand. As per its tagline “Zindagi Saath Bhi, Zindagi Baad Bhi” and “LIC Who Knows India Better”, LIC truly follows such taglines.
LIC has been providing life insurance in India for more than 65 years and is the largest life insurer in India. With 61.6% market share in terms of premium or GWP, 61.4% market share in terms of new business premium (Or NBP), it holds 71.8% share in terms of number of individual policies issued. LIC has a market share of 88.8% in terms of number of individuals as well as the number of group policies issued for the nine months ended 31st December 2021. (Source- CRISIL REPORT)
LIC’s market share in Life Insurance Corporation of India industry for the financial year 2021 is 64.1% in terms of GWP, 66.2% in terms of NBP, 74.6% in terms of number of individual policies issued and group policies In terms of numbers, it was 81.1%. (Source-CRISIL REPORT)
According to CRISIL, this is due to LIC’s vast agent network, strong track record, immense trust in the brand ‘LIC’ and its trust over 65 years.
LIC is ranked 10th globally in terms of life insurance GWP (comparing its life insurance premium for FY 2021 as compared to its global peer life insurance premium for 2020) and net worth (as on 31 March 2021). on asset basis) CRISIL REPORT

LIC is the largest asset manager in India as of 31 December 2021, with AUM (Investment of policy holders, and assets held to cover liquid liabilities).
40.1 trillion on a standalone basis, which was (1) more than 3.2 times the total AUM of all private life insurance companies in India, (2) nearly 15.6 times the AUM of India’s second largest player in the life insurance industry.
AUM in terms of (3) more than 1. 1 times the AUM of the entire Indian mutual fund industry and (4) was 17.00% of India’s estimated GDP for FY 2022. (Source- CRISIL)

According to a report by CRISIL, LIC’s investment in listed equities as of December 31, 2021 was about 4% of the total market capitalization of the National Stock Exchange on that date.
LIC was formed on 1 September 1956 by merging and nationalizing 245 private life insurance companies in India with an initial capital of ₹ 50 million. From its formation till the year 2000, it remained the only life insurance company in India. LIC was identified as the most important insurance company domestically by IRDAI in September 2020 on the basis of its large size, market importance and domestic and global interconnections.

Issue Details

To meet the Government of India’s disinvestment program and list clock, LIC is entering the market with the first IPO of 221374920 equity shares. LIC has fixed a price band of Rs 902–949 and is preparing to raise Rs 21008.48 crore from the market. The issue of LIC will open on May 4, 2022 and will remain open till May 9.
LIC has also provided a special opportunity for all its policy holders and 22137492 shares have been reserved for all its policy holders. And all policyholders will also be given a share discount of ₹ 60. 1581249 shares have been reserved in this for all its eligible employees. It is also giving ₹ 45 per share for retail and employee class.
In this issue, 50% share has been reserved for QIBs, 15% for HNI’s and 35% for its retail category.
After allotment, it is going to be listed on both NSE and BSE. The issue is 3.50% of LIC’s post IPO tree-up capital.

The Joint Book Running Lead Manager for this issue is Kotak Mahindra Capital Company Limited, Axis Capital Limited, BofA Securities India Limited, Citigroup Global Markets India Private Limited. Also Goldman Sachs (India) Security Private Limited, ICICI Securities Limited, JM Financiers Limited, Nomura Financial Advisory & Securities India Private Limited, SBI Capital Markets Limited and Caffeine Technology Limited are the registrars of this issue.

Good Factors about LIC

LIC is a part insurance and part investment products company. Their plan is a combination of insurance and investment with guaranteed returns.

LIC has more than 13.5 lakh agents who bring in most of the new business. LIC’s plans offer ‘fixed returns’ along with life insurance coverage. This makes sales easier by agents and gives insurers peace of mind.

LIC has a lot of trust in the public for both life insurance as well as the investments made with them. LIC is synonymous with insurance in India.

LIC manages assets worth Rs 39 lakh crore. That’s more money than the entire mutual fund industry. They invest these funds in stocks and bonds. They own 4% of all listed stocks in India and government bonds more than RBI.

Leading insurance provider in India and fifth largest global insurer by GWP. A range of life insurance products to meet the varied insurance needs of individuals.

Key Challenges

-LIC’s new policy growth is bad as they are losing market share to private insurance companies, especially in urban areas.

Margins are low in insurance + investment products.

It is very difficult to give importance to LIC as the business model is not unlike any other company. LIC first deposits the money and later promises to compensate the policyholders. The premiums they collect (partial insurance and partial investment) cannot be recognized as revenue.

INFOGRAPHICS BY INSIDE PRESS INDIA

IPI REVIEW

Life Insurance Corporation of India is a leading Indian insurance company. India’s biggest ever IPO is bringing in the market. LIC’s valuation, its hold on the Indian market and its strong position in its sector are good factors for this IPO. But due to the ongoing Russia-Ukraine war and global recession, the mood of all financial markets is not doing well. If we talk about the Indian markets, then the Sensex is also seen in a lot of consolidation mood. This slowdown in the stock market is expected to continue throughout the month of May. At such a time, LIC’s IPO may prove to be good for the market, but how much profit it will give to investors cannot be guaranteed. taking into account all the factsInside Press India assigns the rating of “SUBSCRIBE” to “SUBSCRIBE” to LIC’s IPO. Investors can invest in LIC’s IPO from a medium to long term perspective but do not expect high listing gains .