LIC IPO: Read this before investing in it - Key details

The Life Insurance Corporation of India (LIC) filed its Initial Public Offerings (IPO) papers with the Securities and Exchange Board of India (SEBI) on Sunday, February 13. The Secretary of the Department of Investment and Public Asset Management (DIPAM), Tuhin Kanta Pandey tweeted this information on Sunday evening.

The LIC IPO has been in talks for almost a year now and it will finally take place in the month of March as speculated and enter the world of privatisation. Even though the papers have been approved, the price of the IPO has not been decided yet. However, it is expected to be one of the largest IPO that India has ever witnessed. 

As per the reports, the government will raise Rs 75,000 crore by diluting 5 per cent in it. 

Why is there a need for a LIC IPO? 

In plain and simple words, the government needs money to tackle the deficit in budgets that came into existence after the COVID-19 pandemic hit the country. 

The idea behind the launch of the LIC IPO is to boost the Indian economy and raise money to run the country that is already short of its target i.e 780 billion rupees.

Should you invest in LIC IPO?

Investing in an IPO is never a bad option. You can always invest and then sell the shares. However, no matter how excited one may be about the LIC IPO, all factors need to be considered. 

One of the biggest reasons to invest in LIC would be that it has been a household name since 1956 and is trustworthy. It is a 100 per cent government-backed company so there's nothing to worry about. 

Secondly, LIC is offering discounts to its policyholders. Investment in what will be called India's largest IPO with a discount is not bad. 

However, amongst the positive things, there will always be negative as well. 

The uncertain part of this IPO is that even though it is being considered as the largest company on the block, no one is sure if it will be able to perform in the market among other players that are much market savvy. There are also questions of the company will be able to make decisions independent of the government because that will decide the course of shareholders in the future. 

As per the reports, the government will be diluting a 5% stake in it to raise about ₹75000 crores. 

For the unversed, the Life Insurance Corporation of India was created in 1956 and was the only player in the market until other companies were allowed to venture into the same sector in 2000. The company holds huge offices in Chennai and Mumbai with over 1,00,000 employees and over 10,00,000 insurance agents across India. 

Notably, in case you are a policyholder, you will have to link your PAN card with your LIC policy and have a valid Demat account to access the discount offered on the IPO.