The LIC IPO is estimated to raise Rs 21,000 crore at the upper end of the pricing band and would be critical in helping the government reach its divestment goals. The key business objective of LIC IPO is to capitalize on development prospects in the Indian life insurance industry. Moreover, the total premium for life insurers is expected to expand at a CAGR of 14-15 percent over the following 5 years.
When would LIC IPO Subscription be available for the general public?
Life Insurance Corporation of India (LIC), the nation’s leading insurance provider, will start its initial public offering (IPO) for ordinary shareholders on Wednesday (May 4). Through the LIC IPO, the administration hopes to sell a 3.5 percent interest in the state-run insurance giant for Rs 21,000 crore. The issue will be available for subscription on May 4 and will conclude on May 9. This is the largest IPO in the Indian stock market in history.
Here are the 8 things to keep in mind before investing in LIC IPO
Initial Public Offer Dates
The bid will be available for enrollment on May 4 (Wednesday), and the deadline to subscribe is May 9. (Monday).
The price range for the offer is Rs 902-949 per ownership stake with a face value of Rs 10 each. Nevertheless, LIC would provide a reduction of Rs 60 to qualified policyholders, while individual investors and workers will receive a concession of Rs 45.
By selling 3.5 percent of its stock in the insurance giant, the government of India hopes to raise Rs 21,000 crore at the top end of the price range. The IPO is solely a deal of 221,374,920 share capital by the administration, which will get the whole IPO revenues. Up to 1,581,249 units of the stocks on the block are allocated for employees, and up to 22,137,492 shares are held for policyholders.
The objectives of Public Offering
The issue’s goals are to realize the rewards of listing the stock shares on the stock exchange and to conduct a revenue of 221,374,920 shares by selling stockholders.
Sizes of lots
Shareholders can bid for a smaller batch size of 15 units and duplicates of that amount. For Rs 1,99,290, a small investor can register for up to 14 lots or 210 shares. The highest bid value has been set at Rs 2 lakh for individual investors, LIC workers, and LIC members.
In terms of GWP (gross written premium), NBP (new business premium), amount of individual policies granted, and quantity of group policies approved, LIC is the largest life insurer in the nation. It has a total share of 61.4 % in NBP (individual and group). Although, the closest rival has a customer base of 9.16 percent in NBP (individual and group).
A quick look at the financials
After FY21, LIC had Rs 37,46,404.47 crore in resources under administration. So, a 10% increase from Rs 34,14,174.57 crore the previous year. During this time, the net profit increased from Rs 2,710.48 crore to Rs 2,974.14 crore.
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LIC’s strengths stem from the fact that it is the world’s fifth-largest life insurer by GWP and the biggest player in the fast-growing and underserved Indian life insurance sector. LIC is a well-known brand with a customer-focused business strategy and a pan-Indian platform. It primarily operates through an omnichannel distribution system with an unrivaled agency workforce; it is India’s largest asset manager with a proven track record of financial results, enhanced profitability, and a strong risk management system.
Things to Consider
LIC has regularly lost market share to private companies over the last five years. In terms of overall life insurance costs, it currently controls 64% of the market. During FY16-21, it increased at an annual growth rate (CAGR) of 9%, whereas private insurers expanded at an 18% CAGR.
Even after the IPO, the govt will remain the biggest shareholder and primary manager. As a result, any further government intervention could be harmful to shareholders.
LIC does not have a large web presence, and agents sell 90% of its insurance. If this tendency continues, the total cost of LIC is anticipated to rise in the future.
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