The Life Insurance Corporation of India (LIC) is owned by the government of India and is coming out with the country’s biggest IPO. The majority of people in India have heard of LIC as it has been around for decades. It was established in 1956 by merging over 240 private insurers. LIC has one central office, eight zonal offices, 113 divisional offices, and 4700 branch and mini offices. During its existence, LIC has covered 91% of the districts in India and has spread its operations in other countries like Nepal, Bangladesh, Singapore, Sri Lanka, Bahrain, Fiji, Mauritius, and Fiji.
LIC is synonymous with insurance in India and has a high trust among the public. The products of LIC are a combination of insurance and investment with guaranteed returns. It has over 13.5 lakh agents who bring most of the new business and the company has a large range of products that meet the insurance requirements of the individuals. The number of employees of the company is around 114,000.
The IPO will open on May 4 and close on May 9, 2022, and the government will offload 3.5% of its holding which has been trimmed down from 5% which was planned earlier. The market value of LIC has been calculated at Rs. 6 trillion after comparison with global peers like Shenzhen-based Ping An Insurance. The issue size of the IPO would be Rs. 21,000 crore which is the largest in India even bigger than the Paytm IPO in 2021 at Rs. 18,300 crore, Coal India IPO in 2010 at Rs. 15,500 crore and Reliance Power issue in 2008 at Rs. 11,700 crore.
The price band of the Initial public offering has been set at Rs. 902 to Rs 949 with a discount of Rs. 60 for the policyholders and a discount of Rs. 45 for retail investors and employees. If a person is a policyholder and has linked PAN with the policy they can apply in the reserved quota category as around 10% of the IPO is reserved for the policyholders and the chances of getting allotment are higher through this process.
The government now expects to raise $2.74 billion by selling a 3.5 percent stake. Besides the policyholders and shareholders, the remaining shares would be allotted and the percentage for these categories is 50 percent for qualified institutional buyers (QIBs), 15 percent for non-institutional investors, and 35 percent for retail buyers.
LIC is the largest insurer in India but along with this, it is also a big investor in the stock markets. It is the biggest institutional investor having 4% of the total market capitalization of the National Stock Exchange (NSE). LIC has Assets under management of Rs. 39 lakh crore and its holdings in companies are Reliance Industries 6%, TCS 4%, ITC 16%, Infosys 6%, and State Bank of India 8%.
The company received a premium of Rs. 339,972 crores and had a net profit of Rs. 2627 crore(FY19), a premium of Rs 382,476 crore and a net profit of 2710 crore(FY 20), and a premium of 405,398 crores with a net profit of Rs. 2974 crore(FY 21).