Preparations are on to bring the country’s largest life insurance company LIC IPO. Regarding this, advertisements are being given on the front page in the major newspapers of the country so that more than 25 crore policyholders can buy a stake of LIC. According to market experts, LIC’s IPO can prove to be an Aramco moment for India in a way. Aramco is a giant Gulf oil company, whose listing of $ 2,944 million (Rs 2.19 lakh crore) is the largest in the world.
The prospectus of LIC’s IPO may be filed with the market regulator SEBI in the last week of this month starting January 31. Union Finance Minister Nirmala Sitharaman has set the deadline for listing till March. LIC has more than 2 thousand branches and more than 1 lakh employees.
LIC IPO may change India’s global image
LIC has assets of about $ 50 thousand crores (Rs 37.20 lakh crore) and its value is about $ 203 thousand crores (Rs 15.12 lakh crore). Through IPO, LIC can raise $ 1 thousand crores (Rs 74.38 thousand crores), which in a way will be the third-largest insurance company in the world. After the IPO, the government’s stake in it can be reduced by at least 5 percent. According to Jens Beeland Rogers, chairman of Beeland Interests Inc and Rogers Holdings, India’s global image may change after the listing. Rogers has been investing in emerging markets for the past few decades. This could strengthen PM Modi’s image of a market-oriented reformer ahead of the upcoming elections and help reduce the budget deficit as well.
These are the questions and challenges LIC IPO
One of the challenges regarding LIC’s IPO is to attract foreign investors. The ten bankers managing the listing have held discussions with almost all large funds including GIC RE, Canada Pension Plan Investment Board, BlackRock Inc, and Abu Dhabi Investment Authority.
There are questions in the minds of investors regarding IPO whether LIC will get more autonomy after listing.
1-What is Life Insurance Corporation IPO?
The government wants to reduce its stake in LIC. For this LIC’s IPO is being brought. IPO can come by the end of this financial year. However, it is also being said that the IPO can be postponed for the next financial year as well. The government says that LIC’s IPO or sale of shares will make the work of LIC more transparent and efficient. After filing the paper in SEBI, more detail information will be available.
2-What is the IPO opening and closing date?
According to DIPAM, LIC’s IPO may come in the third or fourth quarter of the financial year 2020-21. Pre IPO process is going on. The exact date of the IPO has not been announced.
3-What will be the effect of going IPO on the existing LIC policyholder?
With the arrival of LIC IPO, there is less chance of its direct impact on the policyholder. However, with the listing of this company, there will be transparency in the work of LIC, the work will increase rapidly and from taking the policy to the claim settlement work will be more efficient. In this way, the policyholder will get indirect benefit from the IPO. Reserve quota will be given to the policyholder in booking the IPO.
4-IPO will have sovereign guarantee i.e. will get government guarantee?
LIC is so popular today, so government or sovereign guarantee has a big role in it. That is why the government would definitely like that that guarantee should remain for the customers. The government has made changes in the LIC Act, 1956 to bring IPO. In this way, we have to see what is the effect on the assets of LIC and how much will the policyholders be affected by it.
5-What is the lot size and minimum order quantity of LIC IPO?
There is no information about this as of now and it will be known about it only while submitting the paper to SEBI before the IPO of LIC. This paper is called the Red Herring Prospectus.
6-What is the allotment date of LIC IPO, on which date will the IPO be launched?
The date of issue of LIC IPO is not clear yet. Not yet given any information about LIC or SEBI
7-Who is the registrar of LIC IPO?
In whose hands is the responsibility for this?
In whose hands is the full responsibility of LIC IPO or who has been made the registrar of LIC IPO, there is no information about it.
Where will the IPO of Life Insurance Corporation of India be listed?
Information related to LIC IPO share price and listing is also not available yet.
What will be the price band?
At what price the shares will be brought in LIC IPO, it is not decided yet. But, it is very important from the market point of view. Actually, the experience of IPO of government insurance companies before getting listed in the market has not been good. In the year 2017, the share of New India Assurance Company was offered for Rs 770-800. It was listed on BSE for Rs 748.90. Today the share price of New India Insurance is around Rs 161 much below the listing price. General Insurance Corporation of India was listed on NSE at Rs 857.50, but today its price has reached Rs 149.50.
Why is LIC IPO important for the government?
Disinvestment of LIC is very important for the government. If it has to meet the disinvestment target of Rs 1.75 lakh crore in this financial year, then it can be done from LIC only. Finance Minister Nirmala Sitharaman had announced in the budget that in 2021-22, the government wants to raise Rs 1.75 lakh crore through disinvestment. There is also a plan to privatize two public sector banks, but nothing has been decided yet.
Why should you invest money?
LIC is the largest company in the insurance sector of the country. Considering the size of LIC and its reach to the common man, the growth in its business is only anticipated. In view of the pandemic-like conditions, there are strong prospects for the future. The market share of LIC is around 66 percent. As on 31 March 2020, the total assets of LIC were Rs 37.75 lakh crore. It has a vast network of 22.78 lakh agents and 2.9 lakh employees. LIC is also one of the largest institutional investors in the stock market. Investing in the stock market is a big deal. Good returns are always expected from a good investment portfolio.
What is Anil Singhvi’s opinion on LIC IPO?
LIC’s IPO will be the biggest ever. Market guru and Zee Business Managing Editor Anil Singhvi believes that there is no need to think before investing money in LIC’s IPO. In such a situation, there is no need to bring the entire IPO together. You can also bring an IPO in two parts. Under this, one lot of shares will be offered first. After some time the second part may be offered. However, many market analysts have also said that due to such a huge IPO, investors should have enough money to buy LIC’s IPO.
10 Merchant Bankers Shortlisted for LIC IPO
According to the news of PTI, an official said that 10 bankers including Goldman Sachs, JP Morgan, ICICI Securities, Kotak Mahindra Capital, JM Financial, Citigroup, Nomura Holdings have been shortlisted.