Life Insurance Corporation of India, or LIC, is the largest insurer in the country. It is one of the most trusted brands in the financial sector. While the Indian government has staunchly maintained control of this entity since its inception, the company is finally getting ready for its initial public offering (IPO). With the pre-launch IPO activity already underway, the LIC IPO is expected to be the biggest IPO in the country’s history.
As the market is abuzz with the potential investment opportunities that will be opened with this mega-IPO, here is all you need to know about the company, the LIC IPO launch date, the LIC IPO price, and how to apply for LIC IPO.
About the IPO
An IPO or Initial Public Offering allows a company to get listed publicly and its shares to be traded on stock exchanges. The LIC IPO is going to be listed at both NSE (National Stock Exchange) and BSE (Bombay Stock Exchange), with the minority share being offered by the center for public buying. However, the IPO will not affect the sovereign guarantee, and it shall be maintained for LIC.
The government of India presently holds a 95% stake in the Life Insurance Corporation, and the disinvestment through this IPO is expected to dilute nearly 10% of the center’s total stake. In the 2021 Budget Speech, Finance Minister Nirmala Sitharaman indicated that the state expects to raise around Rs. 90,000 crores through the LIC IPO, which would be effectively going towards the reduction of the annual budget deficit.
Although, before this announcement, there were speculations of the IPO size reaching Rs. 1 lakh crores, the official announcement has made financial analysts revise their estimates and project the IPO size to be restricted anywhere between Rs. 70,000 to Rs. 80,000 crores. Still, the goodwill and brand equity that the LIC brand enjoys in the Indian market means that the IPO can surpass expert estimates.
Where the news of the dissolution of the government’s stake in the company has ignited much interest among investors, it has caused policyholders or customers some considerable worry. Fortunately, the policyholders will not be directly impacted by LIC going public. But since its listing is sure to increase process efficiency, transparency, and governance of the company, many indirect benefits will emerge in the long term.
Furthermore, from the standpoint of the BFSI sector, the LIC IPO can significantly boost foreign investment interest in other financial service providers in India. The LIC IPO could very well prove to be the beginning of a new era of globalized growth for the industry.
LIC Company Details
The Life Insurance Corporation of India was established in 1956 as a state-owned insurance provider in the country. Over 245 small insurance companies and provident societies that existed at the time were merged to form this entity.
Until the privatization of the insurance sector in 1990, LIC maintained a monopoly in the Indian market. With its head office in Mumbai and nearly 2050 branches located all over the country, LIC still commands the highest market share (~72%) in the life insurance sector. With hundreds of active plans in the market, LIC offers insurance coverage to individuals and group investors.
|Plan Type||Product Categories|
|Insurance Plans||Term Assurance Plans, Endowment Plans, Whole Life Plans, Money Back Plans, Insurance with Rider Plans|
|Pension Plans||Pradhan Mantri Vaya Vandana Yojna, Jeevan Akshay, Jeevan Shaanti|
|Unit Linked Plans||Nivesh, SIIP, Endowment Plus|
|Micro Insurance Plans||Bhagya Lakshmi, Jeevan Mangal, Micro Bachat|
|Health Plans||Health Protection Plus, Jeevan Aarogya, Cancer Cover|
|Group Schemes and Gratuity Plans||P&GS Products Plan (Encashment, Superannuation), Group Schemes (Term Assurance), Gratuity Plus NAV|
Since 1991, the company has faced steady competition from several homegrown and international brands. As the market expanded and customers gained access to diverse insurance products, LIC also evolved its offerings. The company has successfully adapted its products and processes to the changing times and has been recognized by peers and regulatory bodies for its exceptional performance.
From product innovation to HR policy development, LIC has consistently grown in every field, justifying its high brand equity.
|Year||Awards and Recognition|
|2013||Indian Insurance Award for Best Product Innovation|
|2011||World HRD Congress Award for Innovative HR Practices, CNBC Awaz Consumer Award|
|2009||Golden Peacock Innovative Product/Service Award|
|2008||NASSCOM IT User Award, NDTV Profit Business Leadership Award|
Furthermore, several strategic strengths that have helped LIC maintain its market leader status are –
- As of FY 2019-20, the total assets of LIC are estimated to be about $439 billion (Rs.34 lakh crore).
- LIC has nearly 69% market share in new business and has collected Rs. 1.78 trillion in the first-year premium for FY 19-20.
- The total annual premium receivable for the company is more than 2 lakh crore.
- With over 1.14 lakh employees and more than 13.5 lakh individual agents in its sales and distribution network, LIC is miles ahead of its private-sector competitors.
- Over the years, LIC has also diversified into other businesses such as LIC Mutual Funds, LIC Housing Finance, LIC Pension Funds, and LIC Cards.
- The company has also undergone geographic expansion and operates Fiji, Mauritius, and United Kingdom offices.
With such strong financials and market position, the fundamentals of LIC are strong, and the LIC IPO seems set to help the center achieve its financial goals.
LIC IPO Launch Date
LIC IPO launch date or open and close dates are yet to be announced.
Although the LIC IPO is expected to come out as early as March 2022, the exact date for retail and institutional investors to participate in the initial public offering is not confirmed.
LIC IPO Price
The LIC IPO price is yet to be announced.
The Indian government is expecting to raise $24 billion from the LIC IPO and has indicated that 10% of the share issues may be reserved for LIC policyholders. Meanwhile, investment banks like iBank and others will be invited in June 2021 to submit their proposals for the initial public offering.
It’s only after the official share valuation is completed that the center is expected to announce the price range and minimum order quantity for investors interested in the LIC IPO. Generally, this may be just a week before the actual open date of the IPO. However, based on the paid-up capital of nearly Rs. 25,000 crores and expected market valuation within the range of Rs. 13-15 lakh crores, the LIC IPO expected share price could be within the range of Rs. 400-600 per share.
How To Apply For LIC IPO with TradeSmart
The easiest way to apply for LIC IPO for existing stock-market investors is through their Demat accounts. But, if you have never before participated in primary markets and are wondering how to apply for LIC IPO, then head over to TradeSmart online for a simple and smooth IPO application experience.
In a few simple steps, you can register to the TradeSmart platform and use their ‘Box’ interface to apply for LIC IPO:
Step 1: Simply select the “IPO” option from the ‘Portfolio’ menu in your TradeSmart Box account.
Step 2: Search for the LIC IPO from the list of current and upcoming IPOs. Every important IPO information such as the open and close date, minimum order quantity, price range, and issue size will be visible next to the IPO name.
Step 3: Once you have located the LIC IPO in the list, click on the ‘Bid’ button next to it to participate in the IPO offer. TradeSmart allows you to bid for an IPO and pay through your UPI ID. So, all you have to do to bid for the LIC IPO successfully is enter your UPI ID that is registered to your bank account.
Step 4: Now, you can easily apply for LIC IPO by submitting your bid at the cut-off price or any other price that matches your investment budget. You can only place your bid for share quantity as per the permissible lot size, which is also indicated on the portal.
Step 5: After finalizing the quantity and price for one or multiple bids, you can confirm that you have read the RHP (Red Herring Prospectus or IPO Draft Prospectus) and accept the UPI mandate on your UPI app to block the IPO application amount.
With this, your application for LIC IPO will be confirmed, and you would have participated in the biggest mega-IPO of India.