LIC is well capitalised, will like to have some stake in IDBI Bank: Chairman

Addressing the media on Life Insurance Corporation of India's (LIC's) upcoming IPO, the insurer's chairman M R Kumar on Monday said that the company is well-capitalised and as of now it does not have any immediate capital requirements. If there is any requirement for growth capital, the company will approach the government and the shareholders. 

On the subject of IDBI Bank, the chairman said that LIC will like to have some stake in the bank, indicating that LIC may not completely exit the business. This is important considering that major chunk of LIC's business comes from individual agents. 

With IDBI Bank as a bancassurance partner, the insurer can have diversified distribution mix. He also said in the press conference that LIC Housing Finance may source loans from IDBI Bank. 

LIC currently owns 49.24 per cent stake in IDBI Bank. LIC's draft red herring prospectus (DRHP) states that it may have to ensure that either IDBI Bank or LIC Housing Finance cease to conduct housing finance activities in order to meet regulatory requirements considering housing finance activity shall be conducted only by one entity. 

Kumar also mentioned that in the year 2020-21 the company made total equity profit of Rs 37,000 crore. Compared to this, the company has made a profit of Rs 40,000 crore till November in 2021-22. 
 
LIC filed its DRHP on February 13 for its mega initial public offering (IPO) expected to open next month in March. As per the DRHP, the government-owned insurer will have up to 31,62,49,885 (31.62 crore) equity shares of the face value of Rs 10 on offer through the offer for sale (OFS), representing 5 per cent of equity stake. 

There will be no fresh issue of shares. The DRHP also disclosed the LIC's embedded value at Rs 5,39,686 crore as of September 30, 2021.

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