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In-depth Knowledge Series - LIC IPO

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04 May 2022
4 min read
TWN In-Focus

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The LIC is India's largest insurance provider. In terms of new business premium, it has a share in the market of more than 66.2 percent. The company provides both participating and non-participating insurance products such as unit-linked insurance products, saving insurance plans, term life insurance products, medical insurance, and defined benefit & pension products.

This article will cover the biggest of the hour, the availability of LIC IPO, and the detail related to the Initial Public Offering, Read till the very end and buy the shares as they are available. #TWN

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The day has arrived, and the largest insurance corporation in the country has gone public. LIC (Life Insurance Corporation of India) has released the IPO details, and we are going to cover every minute detail that you need to know about the LIC IPO.

Without delaying the call, let’s get it started.

Life Insurance Corporation of India

The LIC is India's largest insurance provider. In terms of new business premium, it has a share in the market of more than 66.2 percent. The company provides both participating and non-participating insurance products such as unit-linked insurance products, saving insurance plans, term life insurance products, medical insurance, and defined benefit & pension products.

It has a cumulative AUM of Rs. 39 lakh crores listed on 30th September 2021. The LIC network consists of 2048 branch offices, 113 divisional office spaces, and 1,554 satellite offices. It has offices in Nepal, Singapore, Sri Lanka, the United Arab Emirates, Bahrain, Fiji, Mauritius, Bangladesh, Qatar, Kuwait, and the United Kingdom.

Reasons for LIC IPO

LIC is experiencing poor new policy growth as it continues to lose share in the market to private insurance players, particularly in urban areas.

Insurance and investment products have a very low-profit margin, and that is one of the reasons for the opening of this IPO.

It is extremely difficult to value LIC because its business model is unlike any other. LIC collects money upfront and then promises to reimburse policyholders later. The premiums they accumulate (which are half insurance and half investment) are not revenue.

Let’s talk about the IPO.

LIC IPO

LIC's initial public offering (IPO) begins today, May 4, 2022: The LIC IPO, one of the most anticipated public offerings, debuted today and will stay open until May 9. Here are some factors to consider before bidding.

The Life Insurance Corporation's (LIC) initial public offering (IPO) opens to primary markets today, making it India's largest public issue to date by the nation's top insurance provider. On May 2, the LIC IPO came into the limelight to anchor investors. Notably, the government, which owns the insurance giant, intends to sell a 3.5% stake rather than the 5% described in the previous Draft Red Herring Prospectus (DRHP).

As the IPO is open now, the following points will come in handy

LIC IPO date – 4th May to 9th May

LIC IPO Price band - The price range for the LIC IPO has been set at 902 to 949 for every equity share. Policyholders and LIC employees, on the other hand, will receive a 60 and 45 percent discount, respectively, when applying for the public issue.

LIC IPO Issue Size & Limit - The Government of India intends to raise 21,008.48 crores from the tender offer, making it the country's largest IPO to date.

Claimants will be able to apply in lots, with each IPO lot consisting of 15 LIC shares. An applicant may apply for a base level of one lot or 210 shares and a maximum of fourteen lots or 210 stocks. As a result, the bare minimum needed to apply for the Initial public offering is 14,235 (i.e., 949 x 15). The maximum bid amt for retail investors, policyholders, and LIC workers is Rs 2 lakh.

LIC IPO Allotment Date – 12th May 2022

LIC IPO Listings – 17th May 2022

LIC IPO Share Price – LIC shares are priced at 902-949 INR

Review of LIC IPO

Since LIC declared its IPO plans, it has been the talk of the town, and it will become even more so even after submitting its DRHP in February 2022. Investors were calculating its market values across the board, taking into account its massive size of economic and business share in the face of competition. Now that the RHP has been filed and the issue details have been announced, the pricing that reflects the ingrained value and business expansion trajectory appears rational. The issue has become more appealing as a result of its investor-friendly move, which includes a discount to its pillars, namely policyholders and retail investors. With such moves, the Indian government has once again demonstrated its investor-friendliness amid troubling times such as the Russia-Ukraine war, spiraling inflation, and flawed international markets. Investors looking for medium to long-term returns should think about investing in this mega insurer's first mini offer.

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