LIC, which stands for Life Insurance Corporation, is the largest insurance company in India. LIC also holds the largest portfolio of Assets Under Management (AUM). The company also holds more than 66.2% of the life insurance sector. In this article, we take a closer look at the LIC IPO Details and its possible future prospects.
The service portfolio of the company includes 32 individual products:
- Sixteen participating insurance products along with the 16 non-participating products.
- The company also provides unit-linked insurance products such as saving insurance, term insurance, annuity & pension, health insurance, etc.
- The company also provides the same insurance service in the group rider category.
As per various reports, the AUM of the company is currently at a valuation of Rs. 39 lakh crores. LIC has its own 2048 branches that 113 divisional offices have governed along with 1,554 Satellite Offices. The company also has a presence in many foreign countries such as Fiji, Mauritius, Singapore, Bangladesh, UAE, Nepal, Qatar, Sri Lanka, Bahrain, Kuwait, and the United Kingdom.
LIC, through its business operation and Corporation’s omnichannel distribution and network platform, also operates individual services that comprise:
- Individual Agents
- Bancassurance Partners
- There are alternate channels by operation through corporate agents, insurance marketing firms, and brokers.
- Digital sales
- Micro Insurance agents
- Point of Sales via Persons-Life Insurance scheme.
LIC, through its business operation, has penetrated the domestic market. The company is the most trusted brand globally, justifying its catch lines “Jindagi Ke Saath Bhi, Jindagi Ke Baad Bhi”. LIC, in no doubt, has made every effort to make a better India with their motto of “Har Pal Aapke Saath” in a true sense.
The Government of India announced the IPO plans of LIC in the Financial year Budget of 2020. Though finally, the IPO is coming up in 2022, as it took a while to calculate the perfect valuation along with the embedded and intrinsic Value of the company. Even after calculating the company’s valuations, the enormous size of the company makes it challenging for the company to carry out its comparison with the listed peers.
LIC initially came up with an offer that was yet for approval from the company’s board for an IPO offer of Rs. 68,000 crores but had to trim down the offered size to Rs finally. 21,000 crores due to the illiquid situation in global markets created due to the Russia-Ukraine war and the rising inflation that has slowed down the economy. With its IPO offer, the company will only carry out a dilution of around 3.5% of the equity of the company.
OBJECTS OF THE IPO ISSUE:
- To meet corporate targets.
- The company also intends to fund various investments.
- The company intends to create shareholders’ wealth by listing the company’s equity shares on the stock exchange via an OFS offer of 221,374,920 Equity Shares of the company.
BASIS OF THE IPO OFFER:
The basis of the IPO offer been brought by the LIC is as follows:
- LIC is the 5th biggest company globally that has been engaged in the sector of life insurance in terms of the GWP.
- The company holds a majority market share, creating a virtual monopoly in the rapidly growing business sector in the country.
- LIC will be highly benefited by the underserved and the undertone of the growth in the Indian life insurance business.
- The company is a reliable brand, and the business model is a customer-focused business model.
- The company operates on a cross cyclical product mix and fulfills its diversified client base’s wide range of requirements. It also manages an individual product portfolio driven by the participation of the life insurance plans.
- The company has created its solid presence due to an unrivaled agency force, which has helped them create a wide network throughout PAN India.
- LIC has now also carried out digitalization and modern technology to help their customers connect with the generation of operational advantages.
- The company is India’s biggest asset manager. The company has also exhibited a proven track record of financial and operational performance with profitable margins.
- LIC has a solid risk management structure.
- LIC has been managed by a team of highly-seasoned and skilled persons. A solid corporate governance framework leads the governing council of the company.
LIC IPO DETAILS:
LIC came up with their IPO has been defined by DIPAM. The IPO is to meet the Government of India’s program of disinvestment. LIC is coming out with its maiden IPO of 221374920 equity shares to create wealth for the shareholders, with retail shareholders as a priority. The company decided their price band for the IPO with Rs. 902 to Rs. 949. Through this IPO, LIC will aim to raise funds of Rs. 21008.48 crores at the valuations of the upper price band. Check Day by Day IPO Subscription Details (Live Status)
LIC stated that it had reserved 22137492 equity shares in the IPO offer for its policyholders. LIC also stated that it would be offering its policyholders a discount of Rs. 60 per equity share. The company has also reserved another 1581249 equity shares in the IPO Offer for its Employees. Post allotment after the IPO, the company’s equity shares will be listed on BSE and NSE. The IPO issue of the LIC constitutes 3.50% of the post-IPO fully paid-up equity capital base of the Corporation.
The company also stated that it had issued initial equity at par after converting its dividends for FY20 into the equity capital base of the company. Post-IPO offer of the company, LIC’s fully paid-up equity capital base will remain at the same valuation of Rs. 6325.00 crore only as the IPO Offer of the company is a purely OFS offer. The company aims at a market capitalization of Rs. 600242.28 crores on the upper cap of IPO pricing.
|LIC IPO Open Date||May 4, 2022|
|LIC IPO Close Date||May 9, 2022|
|Issue Type||Book Built Issue type IPO|
|LIC IPO Face Value||Rs. 10 per share|
|LIC IPO Price||Rs. 902 – Rs. 949 per Equity Share|
|LIC IPO Lot Size||One lot of 15 Equity Shares of the company|
|Minimum Order Quantity||One lot of 15 Equity Shares of the company|
|Minimum Order Price||Rs. 14,235|
|Maximum Order Quantity||14 lots corresponding to 210 Equity Shares of the company|
|Maximum Order Price||Rs. 199,290|
|Issue Size||221,374,920 equity shares of the company corresponds to about Rs. 21,008.48 Crores|
|Offer for Sale||221,374,920 equity shares of the company corresponds to about Rs. 21,008.48 Crores|
|Retail Discount||Rs 45 per equity share|
|Employee Discount||Rs 45 per equity share|
|Listing At||BSE, NSE|
|QIB Shares Offered||No more than 50% of the Net Offer as in IPO|
|Retail Shares Offered||No less than 35% of the Net Offer as in IPO|
|NII (HNI) Shares Offered||No less than 15% of the Net Offer as in IPO|
|Company Promoters||The President of India, acting through the Ministry of Finance, Government of India, is the company promoter.|
|Basis of Allotment||May 12, 2022|
|Initiation of Refunds||May 13, 2022|
|Credit of Shares to Demat||May 16, 2022|
|LIC IPO Listing Date||May 17, 2022|
|Category||Bidding at||Max Bid Amount||Basis of Allotment||Discount||Final Price|
|HNI||At price||Rs 9,067 Cr||Proportionate||No||Rs 949|
|Retail||Cut-off||Not above Rs 2 lakhs||Draw of Lot||Rs 45 per share||Rs 904|
|Employee||Cut-off||Not above Rs 2 lakhs||Proportionate||Rs 45 per share||Rs 904|
|Policy Holders||Cut-off||Not above Rs 2 lakhs||Proportionate||Rs 60 per share||Rs 889|
LIC IPO Multiple Applications
A LIC policyholder can apply for LIC IPO shares using 2 IPO applications in the following categories:
- Policyholder + Retail Category
- Policyholder + HNI (NII) Category
Also Read : List of Upcoming SME IPO’s in India.
The advantage associated with the LIC IPO Limits in Reserved Quotas:
- Rs 2 lakh investment limit has been there for the policyholders, employees, and the retail investor’s quota.
- The Policyholders can further exercise and benefit from increasing limits by bidding in as the “policyholders + retail” quota by putting Rs 2 + 2 lakhs.
- The company’s Employees can Increase limits by bidding in the IPO as an “employee + policyholders + retail” quota hence exercising an advantage of putting Rs 2+2+2 lakhs.
- Policyholders get a discount of Rs. 60 per equity share on the final offer price as in the IPO.
- The company also stated that it would give a discount of Rs. 45 per equity share in retail as well as employees’ quota.
COMPARISON WITH PEERS:
|Peers||Total Premium of the company as in Rs. Crores||Embedded Value of the company as in Rs. Crores||Market capitalization of the company as in Rs. Crores||Market Capitalization of the company /Embedded Value|
|Life Insurance Corporation of India||Rs. 4 Lakh Crores||Rs. 539000 Crores||Rs. 600000 Crores||1.11|
|SBI Life Insurance Company Limited||Rs. 50000 Crores||Rs. 30200 Crores||Rs. 110000 Crores||3.64|
|HDFC Life Insurance Company Limited||Rs. 38500 Crores||Rs. 29540 Crores||Rs. 123000 Crores||4.164|
|ICICI Prudential Life Insurance Company Limited||Rs. 35700 Crores||Rs. 30000 Crores||Rs. 75000 Crores||2.5|
LIC IPO PROMOTER HOLDING:
The promoters of the LIC, Life Insurance Corporation of India, are as follows:
- The President of India, acting through the Ministry of Finance, Government of India
|Pre – Issue Share Holding||100%|
|Post Issue Share Holding||96.50%|
CONTACT DETAILS OF LIC:
Life Insurance Corporation of India
Yogakshema, Jeevan Bima Marg,
Nariman Point, Mumbai 400 021,
Tel: +91 22 6659 8732
REGISTRAR OF THE LIC IPO:
KFin Technologies Private Limited
Selenium, Tower B,
Plot No- 31 and 32
Gachibowli, Financial District
Hyderabad 500 032
Tel: +91 40 6716 2222
LEAD MANAGER(S) OF LIC IPO
- Kotak Mahindra Capital Company Limited
- Axis Capital Limited
- Nomura Financial Advisory and Securities, India Private Limited
- ICICI Securities Limited
- JM Financial Limited
- BofA Securities India Limited
- Citigroup Global Markets India Private Limited
- Goldman Sachs (India) Securities Private Limited
- J.P. Morgan India Private Limited
- SBI Capital Markets Limited