LIC IPO: Preparations have started to launch the country’s biggest IPO. The company has filed draft red herring prospects (DRHP) with SEBI on February 13. The government will sell 4.99% stake of the company’s post offer paid-up share capital. LIC is about to prove to be the biggest IPO of the country. The government has submitted the DRHP on February 13. Accordingly, the Government of India will issue 31.62 crore shares. According to DRHP, the Asset Under Management (AUM) of LIC as of September 2021 is Rs 39.6 lakh crore.
Tuhin Kant Pandey, Secretary, Department of Investment and Public Asset Management (DIPAM), said that LIC’s IPO is purely an offer for sale (OFS). No fresh issue will be issued in this. “The government is going to sell its 5% stake by issuing 31.6 crore shares,” Pandey said.
If you are also preparing to invest in LIC issue, then first know some of its special things.
Government will remain the owner of LIC
At present the ownership of LIC is with the government. It is the largest life insurance company in the country. The government wants to raise around Rs 90,000 crore by selling stake in this company. This will help the government in meeting the disinvestment target of the current financial year. Even after the IPO, LIC will continue to be owned by the government. As per the law, the government’s stake in LIC cannot be less than 51 per cent. Apart from this, the government cannot sell more than 25 percent of its stake in LIC during 5 years.
LIC has highest market share
LIC has a market share of 64.1%. According to a report by Crisil, it is the largest life insurance company in the country. Its return on equity is also the highest at 82 per cent. It is the third largest insurance company in the world in terms of life insurance premiums. If we talk about market share, then there is no other insurance company in the world whose market share is 64 percent.
LIC IPO: DRHP of country’s largest IPO handed over to SEBI, government will sell 5% stake
LIC’s return on equity is the highest in the world
The CRISIL report states that LIC’s 82 per cent return on equity is much higher than other major insurance companies in the world. Chinese insurer Ping has a return on equity of 19.5 per cent, while that of Aviva is 14.8 per cent. China Life Insurance has a return on equity of 11.9%.
New Business Premium Growth Superb
LIC’s profit after tax stood at Rs 1,437 crore in the first half of the financial year 2021-22. Its profit stood at Rs 6.14 crore in the same period a year ago. LIC’s new business premium grew at 554.1 per cent in the first half of this financial year. It is the sixth largest insurance company in the world in terms of total assets with $522 billion.
LIC will be the largest listed company in the country
According to London-based Brand Finance, the market value of LIC is estimated to reach 43 lakh crores this year. It is expected to increase to Rs 58.9 lakh crore in the next five years i.e. by 2027. In this way, it can remain the largest company in the country for the next several years. At present, the valuation of the country’s largest company Reliance Industries is more than Rs 16 lakh crore. TCS is second in this regard, with a valuation of more than Rs 14 lakh crore.