LIC IPO | WHAT TO EXPECT? VALUATION, PRICE, ALL DETAILS

The government of India announced to launch the IPO of LIC and the Cabinet Committee on Economic Affairs approved the IPO in July 2022 and is expected to be launched soon in March 2022. It is a part of the government’s disinvestment policy. The government has set a target of Rs 1.75 lakh crores to raise through the disinvestment of PSUs.

So far, the government has achieved Rs. 75 lakh crores through disinvestment and the remaining are to be achieved through disinvestment in banks and financial institutions. So, GOI is expecting to raise Rs. 1 Lakh Crores through IPO of LIC be selling at least 5% of its stake in LIC.

Deloitte and SBI Capital have been appointed as Pre IPO Transaction advisors. The actuarial firm Milliman advisor is appointed to assess the value of LIC. According to Mr. Tuhin Kanta Pandey, Secretary of the Department of disinvestment, the embedded value could be more than 5 Trillion Rupees.

Under the embedded value method, the present value of future profits of insurance company’s is also included in their NAV Net Asset Value. Media reports have projected LIC’s valuation at around four times the embedded value.

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The government has appointed 10 merchant bankers including Goldman Sachs, Citigroup Global Markets, and Nomura Financial advisory and securities (India ) Pvt. Ltd. To manage the Mega IPO.

A portion of the IPO has been reserved for Anchor investors (Anchor investors are institutional investors who are allotted shares just before the subscription opens up for an IPO, Since they are guaranteed to be allotted shares, they are bound to hold shares for a certain lock-in period which is 30 days currently.)

The government has said that 10 percent of the LIC IPO issue is also reserved for existing LIC policyholders.

The authorized share capital of LIC is increased to Rs. 25000 crores. The market share of the LIC is still at 66% of the insurance sector as per the IRDAI report. It is having more than 13lakh LIC Agents. LIC reported a profit after tax of Rs. 1437 crores in the first half of this year (April- September). LIC has over 1.14 lakh employees, 2000 branches, 30 crores policies.