India has 24 life insurers that operate currently throughout the country. LIC is one of the leading insurers with top spots in the market with a 69% share as of 2020. In the fiscal year 2020, LIC has gathered the premiums for the first year up to INR 1.78 trillion i.e. 25.17% more than in comparison to its previous year premium which was INR 1.42 trillion as suggested by the Insurance Regulatory and Development Authority of India. The share of the Indian government in LIC limited is 95% along with the value of INR 34 trillion.
The announcement of the IPO was done by the finance minister of the country Nirmala Seetharaman. It’s quite intriguing to find such a massive IPO announcement during the Covid-19 pandemic when banks and financial institutions are suffering from asset liquidity concerns. The banking sector can expect to grow as LIC is one of the prominent names in the Indian finance market. Also, this IPO is expected to enhance the rates in the indices while grabbing investments from institutional and retail investors.
LIC IPO Review
The date is not been announced yet for this massive IPO by LIC. According to the Indian government, the LIC IPO will be made available for subscription in the second half of 2021’s fiscal year however, with the process going on it might get delayed to next year. LIC IPO 2021 has appointed Edelweiss Financial Services Limited along with Deloitte to be the pre-IPO advisors. Since their appointment, the IPO has observed a certain speed in the process. It’s expected that if all the parties work together at a scheduled plan and gather the approvals required from the concerned regulators to finalise the IPO the date might just get preponed to the end of the year.
LIC IPO is an initiative under which the government of India is expected to give up only 10 percent of its own in the LIC. According to the estimates made by various analysts, the size of the LIC IPO would be within the range of INR 70 000 crores to INR 1 lakh crores. Using the stakes of IDBI Bank and LIC, the Finance Ministry has represented the budget for a raise of Rs 90, 000 crore.
Other Important Details
The LIC IPO will be regulated and monitored by the Department of Investment and Public Asset Management popularly known as DIPAM. The organisation takes care of disinvestments and investments made by the government. The secretary of DIPAM, Tuhin Kanta Pandey has assured that investors can prepare themselves for the IPO by October 2021. Moreover, DIPAM has hired the services provided by Milliman Advisors to declare and identify LIC’s value before the launch of the IPO.
According to the DIPAM secretary, LIC is planning to extend up to 10% shares to the existing holders of the policy. It’s intended to allow the policyholders to become shareholders and be a part of the company’s exceptional growth. The IPO aims at raising INR 1.75 lakh crore through the sales of the asset to revive the Indian economy. The LIC IPO is a step towards the disinvestment plans of the government in the coming future.