State-owned insurance group and investment company, Life Insurance Corporation of India (LIC), last week, filed a draft red herring prospectus (DRHP) with the Securities and Exchange Board of India (SEBI) to raise funds through an initial public offering (IPO). The IPO consists of an offer for sale of 316.25 million shares by the Government of India. LIC IPO This is likely to be the biggest IPO ever in India.
LIC IPO: When will it happen?
An initial public offering of over 316 crore shares or the government’s five per cent stake is likely to hit D-Street in March and the insurance giant’s employees and policy holders will get a discount on the floor price.
LIC IPO: What’s in it for policyholders
According to the prospectus, employees and policyholders of the country’s largest insurance company will get a discount on the floor price. The amount planned to be reserved for policyholders can go up to a maximum of 10 per cent. “The total reservation for eligible policyholders should not exceed 10 per cent of the size of the proposal,” the DRHP said. Employee quota will be capped at 5 percent.
LIC IPO: Which policyholders are eligible?
To invest in the much-awaited LIC IPOThe policyholder should have two things: The policyholder’s PAN should be updated on the LIC portal, the policyholder should have a demat account.
LIC IPO: Policyholder’s Discount
The quantum of possible discount will be specified at least two working days in advance of the date of opening of the bid. Policyholders’ quota in IPOs – the first of its kind – was created after the central government allowed LIC to nominate policyholders as one of the reserved categories, as per an amendment made last year to the LIC Act, 1956.
LIC IPO: How policyholders can check PAN-LIC status
- Go to https://linkpan.licindia.in/UIDSeedingWebApp/getPolicyPANStatus
- Enter the policy number, date of birth and PAN information, as well as the captcha. Then press submit button.
LIC IPO: How to PAN Link Policy Number
Policyholders can link their policy with their PAN through online mode. However, policyholders who are not well versed with the technology can ask their agents to do the same for them.
LIC IPO: Market Share
LIC has a majority share in the life insurance market in India. The government, which hopes to raise up to $12 billion from stake sale in the IPO, expects the proceeds to help bridge the deficit gap this fiscal.
LIC is not only the world’s largest when it comes to domestic market share with over 64.1 per cent of the total gross written premium as of 2020, but also the one that offers the highest return on equity at 82 per cent, with its Also in third place. Biggest in terms of life insurance premiums, says CRISIL report.
LIC IPO: Financials
LIC has reported a profit after tax of Rs 1,437 crore in the first half of FY 2021-22 as compared to Rs 6.14 crore in the year-ago period. Its new business premium growth rate stood at 554.1 per cent in the first half of FY12 as against 394.76 per cent in the corresponding period of the previous fiscal.
LIC IPO: Embedded Value
As per DRHP, the embedded value has been fixed at Rs 5.39 trillion. Usually companies trade at around 3-4 times the EV.
LIC IPO: How much stake is the government selling?
The government has notified that it will sell 5 per cent of the total capital in the form of shares. Hence, it will retain 95 per cent stake in the company.
LIC was formed on September 1, 1956 by merging and nationalizing 245 life insurance companies in India with an initial capital of Rs 5 crore. Even with many private life insurance companies arriving on the scene, LIC remains the leading life insurer.
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