LIC’s IPO will be the largest IPO in the country, which is expected to raise Rs 80,000 crore. LIC invests more than Rs 4 lakh crore on an annual basis. This investment takes place in debt and equity markets
The IPO of the country’s largest insurance company and Investor Life Insurance Corporation of India (LIC) will not come this year. This may come by the second or third quarter of the next financial year. Its valuation has started, which will be completed in the next 6 months. It will be the largest IPO in the country. Through this, the government will raise 80 thousand crore rupees in the first phase.
Share will be reduced in three years
According to SEBI regulations, the government will have to reduce its stake to 75% in three years after the IPO. In this way, it will sell a 25% stake in three years. With this, the government can get 2 lakh crore rupees.
Listing of LIC will increase transparency for policy holders
According to insurance experts, the listing of LIC will not directly benefit policy holders. The indirect benefit will be that fund management will be better. There will be excellent people in the management, because after listing, LIC will be able to put people on the board itself. The government decides these people right now. Corporate governance will increase. Transparency will increase. Also, whatever market regulators have advantages or rules, they will apply. The biggest advantage will be that the company will have to disclose everything. This will enable policy holders to get more information.
If we look at the business of LIC, there is a very large figure in its annual report. LIC has been in profit from 18 thousand crores to 25 thousand crores. Similarly, in 2018-19, 2.5 lakh crore was invested in debt and 68 thousand crore in equity. Had earned a profit of 23 thousand crores. In 2019-20, 3.75 lakh crore was invested in debt and 60 thousand crore in equity. It made a profit of 18 thousand crore.
In the first 6 months of 2020-21, 2.10 lakh crores have been invested in debt and 50 thousand crores in equity. During these 6 months LIC has made a profit of 18 thousand crores.
Income of LIC more than 5 lakh crores
LIC’s total premium was Rs 3.04 lakh crore in 2016-17, while income was Rs 4.92 lakh crore. The total premium in 2017-18 was 3.18 lakh crore and income was 5.23 lakh crore. Its total premium in 2018-19 was 3.37 lakh crore and income was 5.60 lakh crore. LIC paid a commission of Rs 19,311 crore to the agent in 2017-18, while a commission of Rs 18,227 crore in 2018-19. It has 32 crore policies.
Meanwhile, its total investment has been Rs 29.84 lakh crore. Of this, Rs 28.32 lakh crore in securities, while the other investment has been Rs 34,849 crore. It has also invested Rs 3,906 crore outside India.
Effect of listing of LIC
The listing of LIC can change the weightage of the country’s stock market in a big way in the global equity markets. The government can see the participation of retail investors in this IPO on a large scale. It will issue shares to employees and unit holders. This share will be at a discount and because of this new investors will come in the market. It is estimated that 200 million new demat accounts can be opened. It has a staff of 1.25 million. Its IPO can increase at least 40 million retail demat accounts.
Retail can get a share of 25 thousand crores
If we look at the IPO of Coal India in the biggest IPO till date, retail share was 2.1 times. It was an IPO of 15 thousand crores. LIC will raise 80 thousand crore rupees and if it is considered as a 35% share of retail, then about 25 to 28 thousand crores will go towards retail. This would be two and a half times the retail portion of Coal India’s IPO. According to a report by Brand Finance, LIC is at number 10 among life insurance companies worldwide. The first number is Poste Italian.