LIC (Life Insurance Corporation of India) IPO DRHP: Life Insurance Corporation (LIC) IPO may now just be around the corner with the state-owned company expected to file its Draft Red Herring Prospectus (DRHP) soon. The much-awaited LIC IPO is likely to be the biggest ever witnessed by the country. Earlier this week, DIPAM secretary Tuhin Kanta Pandey told FE that LIC could file the draft IPO papers by “Thursday or Friday”. Preparations for the public issue have been in full swing after the embedded value (EV) was finalized at over Rs 5 lakh crore. LIC’s IPO may help the government reach its revised divestment target of Rs 78,000 crore. So far this financial year the government has managed to raise Rs 12,000 crore from divestment receipts. The IPO is expected to hit the street in March.
Reports claim that the government plans to keep a portion of LIC IPO for policyholders, who could also get discounts as the government wants to rope in a larger section of retail investors. Similarly, the government is in the process of approving a 20% foreign investment limit in LIC to rope in foreign investors to make the IPO a huge success.
“Government often intervenes in the business where maximum growth and income is involved, this might affect the decision making and utilisation of its resources. In the past the company has invested in many loss-making companies due to the policies laid down by the government.”
~ IIFL Securities
LIC's largest holding in percentage terms is Reliance Industries (RIL) with a 5.98% stake at the end of October 2021. The second-largest holding is Infosys with 5.55% stake.
LIC may file its DRHP with the market regulator SEBI tomorrow, CNBC TV18 said. The DRHP will be filed after IRDAI cleared the IPO proposal yesterday.
Insurance regulator IRDAI has cleared LIC's IPO, CNBC TV18 reported today. After the clearing of the proposal the LIC IPO is now expected tomorrow, the report added.
Since the incorporation, LIC has been selling and soliciting life insurance and is the largest life insurer in India in terms of Gross Written Premium with a market share of 64.1%, New Business Premium with a market share of 66.2%, Number of individual policies issued with a market share of 74.6% and the number of group policies issued with a market share of 81.1%.
Life Insurance Corporation of India (LIC) is a statutory insurance and investment corporation, incorporated in 1956 and headquartered in Mumbai. It is a government owned company in India.
The valuation of life insurance companies is usually 3 to 5 times higher than their embedded value. So, LIC’s valuation could be in excess of Rs 15 lakh crore. So, even a 7-10% stake sale could fetch Rs 1.05-1.5 lakh crore if its value is estimated at around Rs 15 lakh crore.
HDFC Life Insurance, ICICI Prudential Life Insurance Company, Max Financial, and SBI Life are some of the major listed companies from the insurance space.
Speaking with FE earlier this week, finance secretary TV Somanathan had said that a very conservative estimate of LIC IPO receipt is included in the revised divestment estimates as neither the valuation nor the size of the issue was known at the time of fixing the estimate. The revised divestment estimate stands at Rs 78,000 crore.
LIC of India has the highest market share in terms of New Business Premium and No of Policies/Schemes is concerned. As of December 2021, LIC’s market share for the New Business Premium stood at ~ 66% which was significantly higher than the total market share of the private players.
~ IIFL Securities
Earlier last week, the state-run Life Insurance Corporation of India’s (LIC) embedded value was finalised at more than Rs 5 lakh crore ($66.82 billion).
LIC's new business premium market share stands at 66% currently. The closest to LIC's behemoth market share are HDFC Life and SBI Life with 7% market share each.
“We are anticipating the momentum in the opening of new retail broking accounts to get a boost on observing the interest that the LIC IPO is generating. 25 crore LIC policyholders and eight crore Demat accounts are currently present in India. With the government's decision to reserve 10% of the total issue for policyholders, we are expecting some discount to the issue price for policyholders. Most importantly, policyholders will need to update their PAN number on the LIC website and link it to their policy number. There will also be a need to open a Demat account to ensure that LIC shares are credited into their accounts,” said Arijit Malakar, Head of Retail Equity Research, Ashika Group
LIC will file a draft red herring prospectus as early as Thursday for its mega initial public offer, department of investment and public asset management secretary Tuhin Kanta Pandey told FE on Tuesday.
Life Insurance Corporation of India (LIC) is expected to file its draft red herring prospectus today. The much-awaited public issue is likely to hit the primary market before the end of this financial year.
