LIC IPO: Country's largest IPO, know these four important things before investing.
10% of the shares issued in the IPO are reserved for policyholders. Along with this, up to five per cent of the equity issued in the IPO can be reserved for employees.
The Government of India has started the final round of sale of five per cent stake in Life Insurance Corporation of India (LIC). Coming in late March, this will be the biggest IPO in the country.
The 65-year-old company has declared its Embedded Value at 5.39 lakh crores ($72 billion). Embedded value is the main measure of future income of life insurance companies.
Many experts believe that the market value of LIC is much higher than its embedded value, but this value is arrived at on the basis of existing insurance deposits for a safe assessment.
10% of the shares issued in the IPO are reserved for policyholders. Along with this, up to five per cent of the equity issued in the IPO can be reserved for employees.
The assets present in the asset under management are largely the amount of the investors. This reflects the business of the company and the trust of the people. September 30, 2021 LIC has assets worth Rs 39.56 lakh crore under the management. This is more than three times the sum of the assets of all other private life insurance companies in India.
LIC is the largest domestic institutional investor in the country, with 25 per cent of its assets in equities.
Competition: LIC has a market share of around 66 per cent. It is the third largest insurance company in the world in terms of life insurance premiums. However, the pace of growth in the business of the company is slowing down compared to other companies. LIC's premium increased by 6.30 per cent in the financial year ended March 2021. SBI Life registered a growth of 24 per cent, HDFC Life at 18 percent.
Policy Holders and Agents: LIC has 283 crore policy holders, as well as the largest network of 13.5 lakh registered agents. LIC had 114,498 permanent employees as of the end of March 2021.
LIC has already engaged agents to encourage policyholders to invest in IPOs. For this, a large number of trading accounts are being opened.
The draft LIC submitted to SEBI has identified certain risks, including the need for additional capital for the future. LIC says there is no guarantee that it will be able to deposit this capital on its own acceptable terms. According to the draft, LIC may also need to infuse additional capital in IDBI Bank, which could further damage its balance sheet.
IPO will change the future of LIC: Sitharaman
Finance Minister Nirmala Sitharaman said, positive discussion has started with the filing of DRHP for LIC IPO. This will be a very positive step in the history of the largest insurer. On the question of bringing IPO in view of the volatility in the market, he said that such big decisions are never taken without thinking.
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